GDP Up 3.3% Beating Economists Expectations

The U.S. gross domestic product (GDP), the broadest measure of the nation’s economic activity, stood at an annual rate of 3.3% in the quarter, adjusted for inflation, the Commerce Department said.  Economic growth between 2.5% and 3.5% is typically viewed as the norm for a healthy economy.

This surpassed last month’s initial estimate of only 1.9%.  Briefing.com recently surveyed economists that had only expected a 2.7% growth.

The $90 billion economic stimulus payments during the quarter helped boost GDP up from just 0.9% growth in the previous quarter, the Commerce Department said.  Many economists are saying the boost in consumer spending is a temporary factor attributed to the tax rebate checks, making the jump in the second quarter an anomaly.

The increase was also partially due to June’s U.S. trade gap reading.  Much improved demand for U.S. exports added 3.1% to GDP, compared to just 0.8% in the advanced reading.  A pickup in government spending, particularly a 0.4% rise in defense spending by the federal government, also boosted GDP.  Mixed readings were reported for inflation in the previous quarter.  The GDP price index, the so-called “price deflator,” which measures prices overall, rose at a 4.2% annual rate.