Economy Grew 3.3% in 2nd Quarter

WASHINGTON -- The U.S. economy was much stronger in the spring than first thought because of better exports and less inventory liquidation by businesses, the Wall Street Journal said, according to a government report that surprised economists.

The Commerce Department said gross domestic product, or GDP., increased at a 3.3 percent annual rate in the April-June quarter, the Associated Press reported. The revised reading was much better than the government's initial estimate of a 1.9 percent pace and exceeded economists' expectations for a 2.7 percent growth rate.

The report showed businesses drew down inventories in the second quarter less than first thought, lowering stocks by $49.4 billion, the Journal reported. Originally, the Commerce Department estimated a $62.2 billion decrease. Companies had lowered stocks of goods $10.2 billion in the first quarter. The drawdown of goods in the second quarter reduced GDP during that period by 1.44 percentage points. In its original report on second-quarter GDP, Commerce said inventories subtracted 1.92 percentage points from growth.

The biggest factor in the second-quarter's rebound was robust sales of exports, which have been bolstered be the weak dollar, the AP reported. Exports grew at a 13.2 percent pace in the spring. That was much stronger than the government's initial estimate of 9.2 percent, and more than double the 5.1 percent growth rate logged in the first quarter.

Imports, meanwhile, fell at a 7.6 percent annualized pace in the spring, as economic troubles in the United States crimped demand for foreign-made goods, according to the AP.

-- NYSSCPA.org News Staff

Posted on 8/28/08