US Economic Growth Accelerates, Hits 2.6 Percent

US Economic Growth Accelerates, Hits 2.6 Percent

US Economic Growth Accelerates, Hits 2.6 Percent

Personal consumption spending jumped to 2.8 percent from 1.9 percent in the first quarter, and exports of services likewise blossomed, adding 6.5 percent, the largest quarterly gain in more than four years.

In May President Trump put forward a budget for next year that projects growth to steadily advance in the coming years, hitting a sustained pace of 3 percent annually by 2021.

The economy grew at 2.1% in the fourth quarter of 2016.

The US central bank left rates unchanged on Wednesday and said it expected to start winding down its portfolio "relatively soon".

The showing marked an improvement over the 1.2% growth pace recorded in the first quarter.

Trump's election and promises of massive tax cuts and infrastructure spending lifted expectations on Wall Street and among economists of faster growth.

"Some quarters, such as this one, were a little above it, some are a little below it, but really if you look at the years in total, they're not moving much from this 2 percent growth on average", said David Berson, chief economist at Nationwide.

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Economists expect the Fed to announce a plan to start reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in September.

Government spending made a marginal contribution of 0.7% for the quarter after a 0.6% contraction previously.

PCE rose 2.8% and was the biggest contributor to growth.

The Canadian dollar added to gains against the greenback immediately after the report, while traders increased their bets of another interest rate hike from the Bank of Canada, which earlier this month raised rates for the first time in almost seven years. It was the third straight quarterly increase.

Nonresidential fixed investment, a measure of corporate spending on structures and equipment, climbed at a pace of 5.2 percent in the second quarter, down from a 7.2 percent growth rate in the previous quarter.

Businesses continued to carefully manage their inventories in the second quarter but spent more in some places. Growth in 2015 is now 2.9 percent, up from 2.6 percent. It also follows a hard week for the West Wing in which new communications director Anthony Scaramucci was quoted using expletives to describe top aides Reince Priebus and Steve Bannon.

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