Bouncing Back, Economy Grew 4% for Quarter

   < < Go Back
from The New York Times,

The United States economy rebounded strongly in the second quarter of the year, shaking off the negative effects of an unusually harsh winter and stirring hopes that it might finally be establishing a solid enough footing to put the lingering effects of the recession squarely in the past.

The Commerce Department, in its initial estimate for April, May and June, reported on Wednesday that the economy grew at a seasonally adjusted annual rate of 4 percent, surpassing expectations.

During the first quarter, output shrank at a rate of 2.1 percent, less than had been reported. The department had earlier said that first-quarter output fell 2.9 percent.

Some experts, citing a range of indicators including an improving job market, were encouraged by the signs of healthy business investment and consumer spending, but others cautioned that the economy had yet to break out of an underlying pattern of steady but relatively sluggish growth that has plagued the nation since the Great Recession officially ended in mid-2009.

The economy grew at a 4 percent pace in the second quarter, more than analysts had expected. Companies increasing their inventories and greater consumer spending fueled most of the growth.

President Obama heralded the positive economic news on a visit to Kansas City, Mo.

In a statement released Wednesday afternoon, the Fed acknowledged that growth had “rebounded,” but its tone was measured and it made clear that it had no plans to raise interest rates anytime soon. It described the chances of faster growth as roughly even with the chances that the expansion would slow down.

“The recovery so far has been unspectacular,” said Ben Herzon, a senior economist at Macroeconomic Advisers, a consulting firm based in St. Louis.

Democrats are hoping to use the signs of an improving economy as a selling point in the run-up to midterm elections as proof their policies are working. Mr. Obama seemed energized by the report, though even his take was muted. He said a healthy jobs market was the real measure of whether the economy was working.

“I’m glad that G.D.P. is growing, and I’m glad that corporate profits are high, and I’m glad that the stock market is booming,” the president told a boisterous crowd in Kansas City. “But what I really want to see is a guy working 9 to 5, and then working some overtime. I want that guy making more than the minimum wage.”

More From The New York Times: