The U.S. economy, fueled by an export-driven manufacturing boom but held back by losses from the drought, expanded at a strong 3.0 percent in the April-June quarter, the government said Tuesday.
The Commerce Department said the gross national product, the broadest measure of economic health, grew to a seasonally adjusted annual level of $3.99 trillion in the second quarter, a $29.1 billion increase from the January-March quarter.It was an unexpected downward revision from a preliminary estimate a month ago of 3.3 percent growth last quarter. The economy had grown at a 3.4 percent annual rate in the first quarter.
If not for the drought, second quarter growth would have been a more robust 3.9 percent. Crop losses for the year are estimated at $13.9 billion and will be even more of a drag on the economy in the third and fourth quarters.
The government attributed the downward revision in the second quarter to slightly less growth than first thought in the two strongest sectors in the economy: export sales and investment spending by business.
Exports of goods and services expanded at a 9.1 percent annual rate, compared with the previous estimate of 11.6 percent.
Business investment spending shot up 15.0 percent, compared with last month's estimate of 16.3 percent.
However, consumer spending, which represents about two-thirds of all economic activity, was up 3.0 percent at an annual rate, compared with a slightly weaker 2.7 percent previously announced.
The linchpins of growth during the first half of this year have been a boom in manufacturing triggered by the export surge and the consequent spending spree by manufacturers to modernize and expand their factories.
But the strong growth has been accompanied by faster inflation. The government said a price measure tied to the GNP rose at the fastest rate in nearly six years.
The GNP deflator, which reflects changes in buying patterns as well as prices, rose at an annual rate of 5.5 percent in the second quarter, compared with 1.7 percent in the first quarter. It was the biggest jump since the third quarter of 1982.
In another report, the Commerce Department said that after-tax profits by corporations surged 8.9 percent in the second quarter to an annual rate of $162.7 billion, up from a 2.5 percent annual rate in the first quarter. It was the most profitable quarter since July-September 1983.