U.S. economy grows at 4 percent rate

BY Andrew Troast  July 30, 2014 at 4:41 PM EST
The U.S. economy was expected get off to a slow start this year after a strong end to 2013 and an icy winter. AP Photo/Charles Rex Arbogast

The U.S. economy was expected get off to a slow start this year after a strong end to 2013 and an icy winter. AP Photo/Charles Rex Arbogast

The U.S. economy grew at an annual rate of 4 percent this spring, rebounding strongly from the disappointing numbers in winter.

Increased personal consumption, advances in the inventories of private industries, along with more government spending both locally and federally, were cited to be the key components in the spurred growth in the initial report on the second quarter. The GDP’s growth out-performed expectations from economists that the economy would grow at a rate of 3 percent in the April-June quarter.

Economists concluded that the unusual stormy weather was a major factor in the decline in the first quarter when the economy shrank by 2.1 percent. Even though that was an improvement from the 2.9 percent contraction the government had initially announced, it was still the most troubling reduction since 2009 when the economy was in the throes of the ‘great recession.’ This has led to some concern that the unexpectedly strong numbers in the second quarter only represent an overcorrection from the unexpected first quarter problems.

On Wednesday, the government released even more revised data, showing that the second half of 2013 saw the fastest growth in a decade — more than initially estimated — but 2011 and 2012 also showed less growth than expected.

It is still unclear whether the more robust numbers will prod the Fed to increase interest rates sooner than expected. Most observers predict the Federal Reserve will wait to increase interest rates until early 2015 to avoid offsetting the current growth. The Fed is expected to release a statement later Wednesday.

Economists are largely taking the numbers as a positive sign that the economy is pulling even further out of the recession and will continue its strong growth heading into 2015. The rest of the year is forecasted to provide a 3 percent annual increase.