The figure comfortably outstripped consensus estimates of 3% and importantly, appears to have been driven by rising consumer confidence.
This represents a sharp rebound from the 2.1% fall in the first quarter and suggests the earlier number was heavily impacted by the unusually harsh winter, rather than anything more complex being amiss in the world’s biggest economy.
Commentators and analysts have welcomed the number as a sign that the American economy, and by implication the world economy, is on track.
“The drivers of this surge in growth are particularly encouraging as it stems primarily from increases in personal consumption expenditure, exports, non-residential fixed investment and residential fixed investment,” said Nathan Sweeney, senior investment manager at Architas. “The increase in consumption expenditure is consistent with lower unemployment, rising wages and a confident consumer,” he added.
Sweeney added that exports of goods and services increasing to 9.5% in Q2 after a fall of 9.2% in Q1, shows that recovery in the rest of the world is also ‘gaining traction.’
He said Architas is maintaining a modest overweight position in the US due to these figures but there remains some concern around Fed tightening and the lack of and earnings growth, according to Sweeney.
