Revised GDP figures show growth in second quarter at 4.6%

Revised GDP figures released by the Commerce Department show second quarter growth rising at a rate of 4.6% instead of the 4.2% originally calculated.

Wall Street Journal:

Gross domestic product, the broadest measure of goods and services produced in the U.S., expanded at a seasonally adjusted annual rate of 4.6% in the second quarter, the Commerce Department said Friday. The agency previously pegged spring growth at 4.2%.

The revision matched the forecast of economists surveyed by The Wall Street Journal.

The economy last grew at a 4.6% pace in the fourth quarter of 2011 and hasn't exceeded that rate since the first three months of 2006.

The latest estimate, the government's third for the April-through-June period, largely reflected stronger business investment, particularly on construction of manufacturing facilities. Exports also were revised higher.

The agency kept in place its estimate of consumer spending—by far the main driver of growth in the U.S.--rising at a 2.5% annual rate, though it revised details. Households spent more on health care than initially thought but less on recreational services.

The report will likely bolster views that the economy, while having yet to reach full speed, is transitioning into a stronger phase of growth five years after the recession.

Real final sales to domestic purchasers-a measure of spending by Americans and businesses-grew at a 3.4% pace, the strongest showing in four years. That suggests improving confidence and finances for both households and firms.

Stronger job growth along with a pickup in consumer and business spending have many economists projecting third-quarter growth to clock in between 3% and 4%. Forecasting firm Macroeconomic Advisers predicts 3.6% annual growth from July through September. If that materializes, the economy will have grown at a pace of at least 3.5% for four of the past five quarters. That hasn't happened since the late 1990s.

To be sure, the economy continues to perform below its potential. A slice of the growth in the spring owed to businesses restocking their shelves after snow storms disrupted operations in the winter. Compared with the year-ago quarter, the economy grew 2.6% in the spring—slightly higher than the sluggish growth of 2012 and 2013.

Unemployment, at 6.1% in August, remains historically high, though it's come down sharply. And despite stronger job growth this year, workers' wages are barely climbing faster than consumer prices. The housing market is struggling to regain momentum, and weakness in overseas economies is threatening to hurt U.S. exports.

This figure is meaningless to most people in my neck of the woods, and across large swaths of the Midwest. It's no accident that a majority of Americans believe the country is still in a recession. Since most people view the economy through the lens of their own personal financial situation, the sense that things are still bad in many places prevails.

That's why the Democrats will not be able to use the slowly improving economy in the November election. Any Democrat who tries to tout the rise in economic growth will be laughed out of town in many districts. Ordinary Americans just aren't seeing it. Wall Street and big business might be doing fine, but the rest of us are still struggling to keep our heads above water.

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