Stronger US growth revealed by revisions as Fed ponders taper

NEW INFORMATION on the US economy paints a picture of much stronger growth in the second quarter, jumping from 1.7 per cent annualised to 2.5 per cent.

The alteration announced yesterday may have consequences for the actions of the Federal Reserve, as the central bank decides when to trim the huge US programme of quantitative easing.

The Fed has suggested that it may begin reducing its $85bn (£54.9bn) monthly asset purchases as soon as next month, but the decision is contingent on continued positive economic data.

Though the first estimate of GDP assumed that net external trade had dragged GDP down by 0.8 per cent, the revised numbers show that it was flat over the period.

Capital Economics’ Paul Ashworth commented: “We expect third-quarter GDP growth to come in around 2.5 per cent as well, with the potential for a slight acceleration in the fourth quarter.” He added: “The latter, however, assumes that the looming fight over the debt ceiling doesn’t trigger a prolonged federal shutdown”