The economy in the United States grew slightly faster than estimated previously during the 2017 second quarter, recording its fastest pace in over two years, but momentum was likely slowed during the third quarter due to the two hurricanes that that caused activity to slowdown.
Gross domestic product was up at an annual rate of 3.1% during the period of April through June, said the Commerce Department on Thursday. This upward revision of 0.1% from the previous 3% reported in August reflected an inventory investment increase.
Growth during the last quarter was faster than any quarter since the 2015 first quarter and followed a growth rate of 1.2% during the quarter from January through March.
Economists had been expecting that the GDP growth for the second quarter would not be revised from its 3% rate.
Harvey, which hit Texas, was blamed for a large amount of the drop in industrial production, retail sales, home sales and homebuilding for August.
Additional weakness was anticipated for September after Hurricane Irma made landfall in Florida.
Rebuilding is expected to increase growth during the final quarter of 2017 and the early part of 2018. Estimates in growth for the period of July through the end of September are just over 2.2%.
With the GDP accelerating during the second quarter, the U.S. economy expanded 2.1% during the first six months of 2017, but economists believe this year’s growth will not breach the ambitious target send by President Donald Trump of 3%.
On Wednesday, Trump proposed a huge overhaul to the U.S. tax system that was the biggest seen in nearly three decades. The overhaul included lowering the corporate tax rate to 20% as well as implementing a new 25% tax rate for the pass-through businesses like partnerships to help give the economy a boost.
However, few details were given with the plan about how the cuts in taxes would be paid for without an increase of the budget deficit and the country’s national debt.
Consumer spending, which represents over two-thirds of the economy in the U.S., was not revised from its 3.3% rate for the second quarter as a spending increase in services was offset from a revision downward in outlays of durable goods. Consumer spending during the second quarter represented the fastest in the past year.
Amidst robust spending by consumers, businesses added a bit more to their inventories that had been reported previously to meet strong demand.