The US economy grew much faster than originally estimated in the second quarter, the Commerce Department reported Thursday, boosting the case for the Federal Reserve to begin cutting back stimulus.
The government reported Thursday that the country\’s economic output in the April-to-June period increased by 2.5 percent compared to the first three months of the year. That advance was markedly higher than the government\’s 1.7 percent estimate a month ago, and more than double the 1.1 percent gain in the first quarter.
The Commerce department said the American economy gained momentum on the strength of exports that were larger than previously estimated, while the increase in imports was less than first calculated.
The government also said that personal consumption spending was up. That is a key consideration, since consumer spending accounts for about 70 percent of the American economy, the world\’s largest. Increased consumer spending helped offset cuts in government expenditures throughout the country.
In another report, the government said that initial claims for jobless benefits fell last week, a sign the country\’s labor market is continuing to improve with businesses laying off fewer workers. The U.S. said 331,000 people sought unemployment compensation, down 6,000 from the week before.
The country\’s central bank, the Federal Reserve, is closely watching economic trends as its weighs whether to start cutting its $85 billion-a-month purchase of securities to boost the country\’s recovery from the depths of the recession several years ago. The Fed has said it could start to pare back its stimulus measures in the coming months if the U.S. economy continues to improve, although the national unemployment rate remains high at 7.4 percent.
Federal Reserve policy makers are set to meet again in mid-September.