Second-Quarter GDP Revised Higher

The U.S. economy grew 3.1% at an annual rate in the second quarter, faster than the government estimated last month, the Commerce Department reported Thursday.

The rise in gross domestic product, the value of all goods and services produced, was the strongest since the third quarter of 2002. The Commerce Department previously reported a 2.4% second-quarter growth rate.

Economists had forecast GDP would be revised to show a 2.9% gain, Bloomberg reported.

Consumer spending, which accounts for nearly 70% of the economy, grew at a 3.8% annual pace from April through June, compared with the government's advance estimate last month of a 3.3% increase. Spending rose at a 2% rate in the first quarter of 2002.

Spending on durable goods, including automobiles, rose at a 24.1% rate, compared with last month's estimate of a 22.6% increase. Meanwhile, business fixed investment, which includes spending on commercial construction as well as equipment and software, rose at an 8% annual rate in the second quarter.

Government spending for national defense surged at a 45.9% annual rate last quarter, the biggest rise since the Korean War in 1951.

Commerce also said inventories fell at a $20.9 billion annual rate last quarter, compared with a $17.9 billion drop estimated last month.

The GDP price deflator, a measure of prices tied to the report, rose at a 0.9% pace in the second quarter compared with a 1% increase reported last month.

The personal consumption expenditures price index, a measure of inflation tied to spending, rose at a 0.7% annual pace.

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