When economic growth in the first quarter of 2014 looked awful, it was widely seen as a fluke and all projections pointed to a big improvement in the second quarter.
Those projections were correct. The preliminary figures on second-quarter GDP looked good; the revised tally looked better; and the final report looks even better still.
The U.S. economy grew at a 4.6% annual pace in the second quarter, matching the best performance since the recession ended in mid-2009. The increase in real gross domestic product was revised up from 4.2%, mainly because of higher exports and business investment, the Commerce Department said Friday. Americans also spent more on health care, but the gain was offset by lower spending on other services.Economists polled by MarketWatch had predicted GDP would be revised up to a seasonally adjusted 4.7%. Consumer spending, the main source of economic activity, was unchanged at 2.5% growth. The biggest gains came in business investment, a good sign for the economy in the months ahead.
To provide some additional context, 4.6% growth is tied for the best quarter since the start of the Great Recession. The last time we saw GDP growth stronger than this was the first quarter of 2006 – more than eight years ago, long before the start of the downturn and the 2008 crash.
What’s more, the shift from -2.1% (January through March) to +4.6% (April through June) is easily the largest positive quarter-to-quarter swing since the start of the Great Recession is late 2007.
As for the image above, the chart shows GDP numbers by quarter since the Great Recession began. The red columns show the economy under the Bush administration; the blue columns show the economy under the Obama administration.