Revised Q2 GDP: Here’s Proof of a Stronger Economy
Consumer spending, which accounts for approximately 70 percent of United States gross domestic product, is now more important than ever. Because government and business spending have remained weak, the economy is depending even more on household spending to fuel growth.
“Nothing looms larger than the health of the consumer in a second-half [economic] pickup,” economists at Citigroup wrote in a research note earlier this month. However, the still stubbornly high unemployment rate, stagnant wages, and higher payroll taxes have kept many consumers cautious, keeping purchases to immediate needs.
In fact, consumer caution was cited as one of the main reasons as to why the U.S. economy grew at anemic 1.7 percent in the first quarter. After rising at a 2.3 percent rate in the first quarter, spending slowed to a 1.8 percent pace.
However, the Department of Commerce’s revised estimate of GDP growth showed that economic growth actually accelerated at a far stronger pace than previously calculated. Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.5 percent in the second quarter of 2013. This compares to the 1.1 percent rate of growth recorded in the first quarter and a 0.1 percent growth rate in the fourth quarter of 2012.