The US economy grew at a 4 percent annual rate in the April-June quarteras consumers stepped up spending and businesses restocked, government estimates showed on Wednesday.
The Commerce Department report, released on Wednesday, showed that the Gross Domestic Product (GDP) extended at a 4.0 percent annually in the second quarter after dwindling at a revised 2.1 percent rate in the first quarter.
In 2014, the US economy had a grim start and the government figures showed that it contracted at the pace of 2.9 percent in the initial months of the year.
Meanwhile, the analysts also expected the economy to rebound strongly and continue to show its vigor next year.
The GDP expansion during April-June quarter was much stronger than the estimates of financial experts.
Chief economist Joel Naroff, Naroff Economic Advisors in Holland, Pennsylvania, said, “The economy came back and even though there may have been a little extra inventory building solid activity was so widespread that you cannot call this number an aberration.”
Meanwhile, jobs remained a big concern for the fed as hiring witnessed a slowdown in July than the previous month.
The private companies added 218,000 employees on payrolls in July, a separate government report showed. The employers had added 281,000 in June.
Even if there was a slight decline in the hiring process in July but experts are still affirmative on this front as they hope it will be solid and consistent in the second half of the year.
With the string of developments in the economy, the US central bank is also expected to further reduce flow of money it is injecting into the market via monthly bond purchases. The analysts, however, say the central bank is unlikely to raise rates until June 2015.
Tim Hopper, chief economist at TIAA-CREF in New York, said, “We do not feel the report calls for pulling forward the Fed rate hike. The first quarter’s bad weather didn’t change the story, but simply delayed when that train gets to the station.”
Meanwhile, the US economy also got a major boost from government spending, business investment and investment in home sector.