US economy grew 3% in second quarter

US real gross domestic product (GDP) rose 3% year-on-year in the second quarter.

“The increase in the second quarter primarily reflected increases in consumer spending, inventory investment, and business investment,” the US Bureau of Economic Analysis said.

“These movements were partly offset by a downturn in residential fixed investment,” the bureau added.

“Imports, which are a subtraction in the calculation of GDP, increased.”

ASB economists today said the US economic data was better than expected.

A string of robust US economic data eased concerns the Federal Reserve might start by cutting rates aggressively to curb any slowdown.

Weekly jobless claims fell more than anticipated, signalling a steady labour market.

“It [the GDP number] just kind of reinforces that strong economic growth backdrop that we have been seeing,” said Mike Dickson, head of research at Horizon Investments in Charlotte, North Carolina.

Fed governor Adriana Kugler said she “strongly supported” the central bank’s decision to kick off monetary policy easing last week.

Investors have been swaying between a 25- and 50-basis point cut since the Fed commenced its easing cycle, with bets favouring a bigger cut now, up from 38.8% a week ago, the CME Group’s FedWatch Tool showed.

-By NZME and Reuters