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US economy grows 2.6% in second quarter
[WASHINGTON] The US economy gathered speed in the second quarter, more than doubling the growth pace of the first three months of the year as consumer and defence spending accelerated, according to data released Friday.
Gross domestic product (GDP) increased 2.6 per cent in the April-June period, compared to 1.2 per cent in the first quarter, the Commerce Department reported.
The preliminary result, which is calculated from incomplete data that will be revised in the coming months, undershot analyst expectations by two-tenths of a point and portrayed an economy facing significant headwinds.
A widening trade gap as well as slowing housing sales, business inventories and spending by state and local governments all weighed on growth, according to the Commerce Department.
The outcome for the second quarter and the downwardly-revised growth in the first quarter, put growth in the first half of 2017 at 1.9 per cent, above the 1.5 per cent recorded last year and close to the economy's long-term trend growth rate of two per cent.
The Trump administration has pledged to push the economy to three percent growth or higher - which officials say will pay for deep proposed tax cuts - but most economists says this is unrealistic.
Defence spending by the federal government had a banner quarter, rising at the fastest pace in six years at 5.2 per cent, more than offsetting the drop in non-defense spending which sank 1.9 per cent, the biggest loss since 2013.
Personal consumption spending jumped to 2.8 per cent from 1.9 per cent in the first quarter, and exports of services likewise blossomed, adding 6.5 per cent, the largest quarterly gain in more than four years.
But the contribution to growth from home buying had its biggest fall in nearly seven years, slipping 6.8 per cent.