US economy pushes ahead

Posted by lindsay on September 29, 2014

Americans got an early Christmas present last week when the US Commerce Department announced that GDP grew at an annual rate of 4.6 per cent in the second quarter of the year, against a predicted 4 per cent.

August also saw new home sales rise to a six year high.

On to of that the Wall Street Journal reported that economic growth was predicted to be 3 per cent for the third quarter of the year. If that proves to be correct, with three of the last four quarters experiencing growth, it would be the strongest stretch of economic growth since 2004/2005.

The Department of Commerce said the GDP growth was due to higher exports and businesses spending more. Exports rose 11.1 per cent for the period and business spending rose 9.7 per cent.

With steadily declining unemployment numbers the Department of Commerce expected business spending to remain strong.

However while businesses might be spending more that Department of Commerce reported that consumer spending was still sluggish.

The good economic news buoyed the US dollar, with the currency reaching a two-year high of 1.27 against the euro. 

Meanwhile new home sales jumped 18 per cent to a seasonally adjusted annual rate of 504,000 units, a second straight monthly gain that took them to the highest level since May 2008, the Commerce Department announced last week.

"This is welcome news in an otherwise mixed outlook," Diane Swonk, chief economist at Mesirow Financial in Chicago told news agency Reuters.

"We are still a long way from the housing market recovering from the bust."