The U.S. economy grew at an annualized rate of 3.9% in the second quarter, rebounding from a sluggish first quarter amid increased consumer and construction spending.
The Commerce Department’s GDP estimate, released Friday, was an upward revision from the 3.7% reported last month. Analysts polled by Reuters expected the third reading of Q2 economic growth to be unchanged.
Consumer spending was revised up to a 3.6% growth pace from the 3.1% rate reported in August, on lower gas prices and higher house values, while construction spending was also revised, with non-residential fixed investment expanding 4.1% in the quarter.
In the first quarter, GDP rose just 0.6%, reflecting harsh winter weather, a labor dispute at West Coast ports and a pullback in energy-industry investment after the plunge in oil prices.
The latest Q2 estimate “supports the case that the U.S. economy may be gaining enough strength to withstand an increase in benchmark interest rates from record low levels despite growing concerns about the global economy,” Reuters said.
On Thursday, Fed Chair Janet Yellen said a rate increase this year is still on the table as long as inflation remains stable and growth is strong enough to boost employment.
“There are a lot of things to like about the domestic side of the economy for the second half of the year despite all the global malaise,” RBC Capital Markets senior economist Jacob Oubina told Reuters. “If the domestic economy holds in there, (Fed policy makers) are going to hike in December.”