The US Commerce Department officials confirmed that the American economy rebounded with growth in the Gross Domestic Product – the broadest measure of the economy’s health – at an annualized rate of 4.2% for the three months to the end of June, topping an initial estimate and beating forecasts.
The Great Recession officially ended in 2009 and the US’s economic recovery is now in its fifth year but Republican obstruction has left workers and consumers facing a sluggish rebound compared with higher profits posted by corporations.
Although businesses have bounced back and consumers are gradually earning and spending more, Democratic policies to trigger a stronger economic recovery have been stymied by Republicans in Congress.
President Barack Obama faces more political turbulence in the years ahead, as many observers predict the Republican Party will gain control of the Senate in the November election.
Business spending grew more in the second quarter than initially estimated and US-based corporations posted higher profits. Corporate profits after tax totalled a seasonally adjusted annual rate of $1.84 trillion, up 6% from $1.735 trillion in the first quarter.
Consumers also picked up the pace as personal expenditures increased 2.5% in the second quarter, compared with an increase of 1.2% in the first. Durable goods increased 14.3%, compared with an increase of 3.2% in the previous period.
The Great Recession officially ended in 2009 and the US’s economic recovery is now in its fifth year but that recuperation has generally shown a sluggish pace.
Stuart Hoffman, chief economist at PNC Bank, said the latest news pointed to solid growth in the second half of the year.
“Demand in the second quarter was revised higher, indicating that businesses and consumers are buying, and the contribution to growth from inventories was revised lower, which means that inventories will be less of a drag on growth in the second half of this year, as businesses are less concerned about having too much stock on hand,” he said.
“Also, profits and gross domestic income were also both good in the second quarter. Businesses have bounced back after the bad winter disrupted production and demand, and consumers are gradually earning and spending more,” Hoffman said.
Hoffman estimates that US GDP will grow at an annual rate of 3% in the second half of 2014.
The Commerce Department’s figures came as the the Labor Department announced initial claims for unemployment benefits declined by 1,000 to a seasonally adjusted 298,000 in the week ended August 23.
The number of Americans filing for first-time unemployment benefits rose to a 26-year high the week before Obama replaced Republican President George W. Bush, Jr., who presided over the worst economic disaster since the Great Depression and a foreign attack on U.S. soil that exacted a larger death toll than Japan’s infamous surprise military strike on Pearl Harbor.
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