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US economy growing at fastest pace since 2015


The US economy grew at its quickest pace for more than two years in the second quarter, reviving prospects of an interest rate hike and delivering a boost for Donald Trump.

Updated official figures showed gross domestic product increased at an annualised rate of 3% – up from an initial estimate of 2.6%.

Mr Trump has set a 3% growth target for 2017, but the economy started the year well off the pace with growth increasing at a rate of just 1.2% in the first quarter.
However, the latest figures reflect robust consumer spending and strong business investment, and mean growth for the April-June period was at its strongest since the first quarter of 2015.
It was a stark contrast to growth in the UK, where growth has slowed to a crawl as households rein in their spending.
The latest figures helped the dollar to build on gains against a basket of currencies in Wednesday trading.
The US currency has been under pressure recently after tensions with North Korea, fears over the economic impact of storm Harvey, and a threat by Mr Trump to shut down the government as part of a stand-off with Congress.
Mr Trump plans tax cuts, deregulation and infrastructure spending, but the administration has yet to pass any economic legislation amid gridlock on Capitol Hill.

Yet there is little sign of this denting business or consumer confidence as the GDP figures, added to retail sales, business spending and jobs survey data for the early part of the third quarter, painting a positive picture.
The revised GDP figures come ahead of closely watched official jobs statistics for August, due for release on Friday.
Strong growth and a labour market that is close to full employment would support the view that the US Federal Reserve will start unwinding its $4.2tn quantitative easing (QE) programme next month and hike interest rates again in December.
The Fed slashed rates and unleashed its money-printing QE stimulus to help nurse the economy back to health during the financial crisis but is now starting to return policy to normal.
US growth figures are published at an annualised rate – showing how the economy would have performed if the improvement over one quarter were extended over a year.
That is different from the UK, which publishes quarter-on-quarter growth figures.
Latest figures from the Office for National Statistics showed growth of just 0.3% in the second quarter, lagging behind other members of the G7 group of large developed economies – even before the latest upgrade from the US.

Source: SKY