Consumer spending, inventories seen lifting U.S. second-quarter GDP

Mon Jul 28, 2014 11:35am EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. economic growth likely rebounded in the second-quarter from a winter-induced slump at the start of the year and will probably continue to gather momentum through the rest of 2014.

Gross domestic product likely grew at a 3.0 percent annual rate, according to a Reuters survey of economists, lifted by an acceleration in both consumer spending and stock accumulation by businesses.

"Pretty much across the board, components will look better. I do think we can sustain a 3 percent growth number for the next couple of quarters," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

Earlier in the second quarter, growth estimates were as high as 4 percent, but they were lowered as consumer spending and business investment rebounded less than expected.

With output having contracted at a 2.9 percent pace in the January-March period, first-half growth was likely flat. As such, growth for the year as a whole could average below 2 percent.

The economy was slammed by an unusually cold winter in early 2014 and also hurt by a slower pace of inventory accumulation and the expiration of long-term unemployment benefits - temporary factors that have since lifted.

Employment growth, which has exceeded 200,000 jobs in each of the last five months, and strong readings on the manufacturing and services sectors from the Institute for Supply Management have underpinned expectations for a strong finish to the year.

The Commerce Department will release its first snapshot of second-quarter GDP at 8:30 a.m. EDT (1230 GMT) on Wednesday. It will also publish revisions to GDP data going back to 1999 as well as for the first quarter of 2014.   Continued...

A woman and child shop at a Walmart in Bentonville, Arkansas June 5, 2014.      REUTERS/Rick Wilking