US Q2 GDP revised to 3.3% on stronger consumption and investment

The U.S. economy expanded at a 3.3 percent annualized rate in the second quarter, the Commerce Department’s Bureau of Economic Analysis said Thursday, an upward revision from the government’s initial 3.0 estimate and a sharp rebound from a 0.5 percent contraction in the first quarter. The revision reflects stronger consumer spending and business investment and comes as trade flows that distorted early-year figures eased.

The BEA said the upgrade stemmed largely from upward revisions to household outlays on health care, pharmaceuticals and restaurants and to business purchases of equipment and intellectual property. At the same time, a drawdown in private inventories subtracted about 3.3 percentage points from growth. Imports, which are subtracted from GDP, fell at a 29.8 percent annual rate after surging in the first quarter, boosting second-quarter growth by more than five percentage points. A narrower measure of domestic demand real final sales to private domestic purchasers rose at a 1.9 percent pace, the BEA reported.

The contrasting movements in investment components help reconcile seemingly conflicting readings in the data. Private investment overall fell sharply for the...