The surging U.S. economy was even stronger in the spring than initially reported thanks to higher government spending and business investment. And companies cashed in big time.
Gross domestic product expanded at a 4.2% annual pace in the second quarter, up from a preliminary estimate of 4.1%, the government said. GDP is the official measuring stick for the U.S. economy.
Economists polled by MarketWatch had forecast GDP to be left unchanged at 4.1%.
The strong growth, along with the biggest tax cuts in 31 years, helped fill corporate coffers.
Adjusted corporate profits before taxes climb 3.3% in second quarter and they were up a sizzling 7.7% over past year. That’s the biggest 12-month gain in four years.
Consumer spending will still quite strong in the second quarter, though a bit less so than previously believed. The government said outlays rose 3.8% instead of 4%.
Businesses investment was a touch stronger, contributing to overall growth instead of subtracting from it. Firms spent more on software and equipment.
Yet the value of unsold goods, or inventories, was still a big drag on second-quarter growth. They fell at a revised $27 billion annual rate.
Exports rose at a slightly revised 9.1% annual clip, though the government said imports fell at a 0.4% rate instead of increasingly slightly. The smaller trade deficit added to strong GDP, though it’s unlikely to last.
Government spending, meanwhile, advanced 2.3% instead of 2.1%, largely reflecting higher spending on the military.
The rate of inflation was moved up to a 1.9% annual pace from 1.8%.
Most other figures in the GDP were little changed.