US economic growth in the 2nd quarter gets revised higher, remains strongest since 2014

Kevin Lamarque/Reuters

• The US economy grew even faster than previously reported in the second quarter, according to a Commerce Department report released on Wednesday. 
• Gross Domestic Product, the value of every good and service produced domestically, rose at an annual rate of 4.2%, revised up from 4.1% in the advance estimate. This was still the fastest pace of growth in nearly four years. 
• The upward revision showed that business investments were stronger than had been estimated.

The US economy in the second quarter grew even faster than had been estimated, according to a report from the Commerce Department on Wednesday. 

Gross Domestic Product (GDP), the value of every good and service produced domestically, rose at an annual rate of 4.2%, the fastest since Q3 2014. The advance estimate released in July had penciled in growth at 4.1%. 

Wednesday's upward revision, based on more complete data, showed that business investment and inventories contributed more to growth than previously thought. 

The April-June period was the first full quarter with the tax cuts signed by President Donald Trump in effect. Consumer spending rebounded from the first quarter. As usual, it was the biggest contributor to growth, although the revised data showed it was slightly weaker than first reported; personal consumption increased 3.8% versus 4% prior. Spending on vehicles and healthcare was revised lower.  

Expectations for growth in the third quarter vary widely. The Atlanta Federal Reserve's GDPNow forecasting model estimates that the economy will grow at a 4.6% clip in the third quarter. But the New York Fed's Nowcast model has growth at just 1.96%. 

Many economists are doubtful that the economy can sustain a 4% growth rate, partly because of a yearslong slowdown in productivity.

• Morgan Stanley is urging its super-rich clients to pull out of one of the market's hottest corners, and it's a warning shot to the US economy

• A group of investors with $16 trillion at stake is struggling to find success, and its survival is in jeopardy

• Investors have turned complacent and are in danger of being sideswiped by a 'likely correction' that's approaching, Morgan Stanley says

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