US Economy Glides Back to Steady, Modest Growth Path

US GDP grew by an annualised rate of 2.6 per cent in the second quarter, according to an early estimate by the US Bureau of Economic Analysis (BEA), broadly in line with expectations.

Personal consumption expenditures, which account for about two-thirds of the US economy, increased at an annual rate of 2.8 percent in the second quarter of the year. The Commerce Department will release its advance second-quarter GDP estimate on Friday at 8:30 a.m. EDT.

In July, the Bank of Canada opted to raise interest rates for the first time since 2010.

The Canadian dollar, which has been gaining ground since the middle of last month when speculation of a central bank rate hike started, was trading at 80.52 cents U.S., up from an average price of 79.87 cents United States on Thursday. USA stock index futures pared losses slightly.

However, analysts said the data suggested Fed was under no pressure to act quickly. On Wednesday, the central bank left rates unchanged following its latest meeting.

The second quarter is the first one that is more a Trump quarter than an Obama quarter, though of course we'll be saddled with Obama's lousy economic program for a long time. PCE's contribution to GDP picked up to 1.93 percentage points from 1.32 in Q1. So far, the impasse in Washington has not hurt either business and consumer confidence.




The Trump administration has pledged to push the economy to three percent growth or higher - which officials say will pay for deep proposed tax cuts - but most economists says this is unrealistic. It grew at 5 percent in the third quarter of 2014 before sputtering out.

In a separate report on Friday, the Labor Department said its Employment Cost Index, the broadest measure of labor costs, increased 0.5. percent in the April-June period after accelerating 0.8 percent in the first quarter.

Inflation was subdued in the second quarter.

Canada's economy is roaring ahead, and at a much faster pace than anyone had expected. Economists polled by MarketWatch had forecast a 2.8% increase.

Government spending made a marginal contribution of 0.7% for the quarter after a 0.6% contraction previously.

The pick-up was helped by consumer spending in the quarter expanding at a pace of 2.8%, and businesses stepping up spending on equipment.

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