Economy rebounds in second quarter, mostly spurred by exports
WASHINGTON -- The economy shifted to a higher gear in the spring, growing at its fastest pace in nearly a year as foreign buyers snapped up U.S. exports and tax rebates spurred shoppers at home.
The Commerce Department reported Thursday that gross domestic product, or GDP, increased at a 3.3 percent annual rate in the April-June quarter. 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 rebound comes after two dismal quarters. The economy actually shrank in the final three months of 2007 and limped into the first quarter at a feeble 0.9 percent pace. The 3.3 percent growth in the spring was the best performance since the third quarter of last year, when the economy was chugging along at a brisk 4.8 percent pace.
Still, the growth pickup is not likely to be seen as a lasting sign that the fragile economy is back on solid ground.
Federal Reserve Chairman Ben Bernanke recently warned the economy will be weak through the rest of this year. A growing number of analysts fear that the country will hit another economic pothole in the fourth quarter, as the bracing impact of the tax rebates disappears. And there are concerns exports could tail off as other countries' economies slow down.
GDP measures the value of all goods and services produced within the U.S. and is the best barometer of the country's economic health.
The economy is the top concern for Americans. Democratic presidential contender Barack Obama favors a second government stimulus package, while Republican rival John McCain supports free trade and other business measures to energize the economy.
On Wall Street, the GDP report lifted stocks. The Dow Jones industrials were up about 150 points in morning trading.
"Many people thought the sky was falling this spring ... but the economy actually expanded quite solidly," said Joel Naroff, president of Naroff Economics Advisors in Holland, Pa.
Still, housing, credit and financial troubles have pounded the economy.
In turn, employers have clamped down on hiring, driving the nation's unemployment rate up to 5.7 percent in July, a four-year high. The Labor Department said Thursday that the number of people signing up for jobless benefits declined last week for the third straight period, but claims remained above 400,000, an indicator of a slowing economy.
