WASHINGTON— The U.S. economy is growing faster than first estimated.
A report Thursday from the Commerce Department says the country's economic output increased at a 2.5 percent annual rate between April and June. That is faster than earlier estimates and more than double the 1.1 percent growth rate in the first quarter.
The chief U.S. economist at High Frequency Economics, Jim O'Sullivan, told VOA that while the 2.5 percent growth is not a "booming number," recently some analysts expected almost no improvement in the economy.
"If you go back a month or so ago, people were worried that [second quarter] number could be close to zero. I think in general, expectations over the last few months have been too low, and I think we're increasingly getting evidence that the economy is recovering," said O'Sullivan.
The Commerce Department said the 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 economy continues to improve, although the national unemployment rate remains high at 7.4 percent.
O'Sullivan predicted that with the improving economy, the Fed is likely to starting trimming its asset purchases.
“All signs at this point suggest that they will start tapering and start winding down the purchase program. Of course, right now they’re buying $85 billion per month in securities, so they’ll start pulling that number down, probably not by a huge amount. I’m guessing they’ll clip it maybe to $75 billion a month from $85 billion."
Federal Reserve policy makers are set to meet again in mid-September.