Second quarter US economic growth was revised higher on consumer spending by Reuters

WASHINGTON (Reuters) – The U.S. economy grew faster than initially thought in the second quarter on strong consumer spending, while corporate profits rebounded, which should help support the expansion.

Gross domestic product grew at an annualized rate of 3.0 percent in the latest quarter, the Commerce Department’s Bureau of Economic Analysis said Thursday in its second estimate of second-quarter GDP. That was an upward revision from the 2.8 percent rate reported last month.

The economy grew at a pace of 1.4% in the first quarter. Economists polled by Reuters had expected GDP to be unrevised at a 2.8 percent pace.

Consumer spending, which accounts for more than two-thirds of the economy, rose at an upwardly revised rate of 2.9 percent. It was previously reported to have grown at a rate of 2.3%. This offset the downgrade in business investment, exports and private investment in inventory.

Spending is supported in part by wage gains, but momentum is slowing as the labor market shifts into a lower gear. Personal income rose $233.6 billion in the second quarter, a downward revision of $4.0 billion from the previous estimate.

Corporate profits, including inventory valuation and capital consumption adjustments, rose $57.6 billion after falling $47.1 billion in the first quarter.

Profits of domestic financial firms rose $46.4 billion, while those of non-financial institutions rose $29.2 billion, more than offsetting an $18.0 billion drop in profits from the rest of the world.

Measured from an income perspective, the economy grew at a rate of 1.3% in the last quarter. Gross domestic income (GDI) increased by 1.3% in the January-March quarter.

In principle, GDP and GDI should be equal, but in practice they differ because they are estimated using data from different and largely independent sources.

Average GDP and GDP, also called gross domestic product and considered a better measure of economic activity, rose at a 2.1 percent rate in the latest quarter, after advancing at a 1.4 percent pace in the first quarter.