The US economy grew solidly at a 3.4% annual rate in the second quarter, the US government reported this afternoon, just slightly below the first quarter's pace.
While second-quarter growth eased from 3.8% in the first three months of the year, it nonetheless marked the ninth straight quarter in which gross domestic product increased at an annual rate of more than 3%, Commerce Department figures showed.
The first snapshot of second-quarter GDP matched Wall Street economists' expectations. The figure will be revised twice in coming months as more data on the economy's performance arrive.
Most measures of activity remained healthy in the second quarter, with consumer spending increasing at a 3.3% rate after growing at a 3.5% rate in the first quarter. Business investment advanced by 9% after growing 5.7% in the first three months of the year.
Companies drew down inventories of goods at a $6.4 billion annual rate during the second quarter - the first time they reduced stocks since the second quarter of 2003 - after boosting them by $58.2 billion in the first quarter. Much of the drawdown appeared to be related to car makers clearing the way for new models. In general, lower inventories are seen as leaving room for companies to boost future production.
Overall prices kicked up in the second quarter, influenced by more expensive oil and petrol. A personal consumption expenditures gauge that is often taken as a measure of inflation climbed at a 3.3% rate that topped the first quarter's 2.3% and represented the strongest rate of prices gain in a year. But excluding volatile food and energy costs, the PCE gauge was up at a more modest 1.8% rate, actually lower than the first quarter's 2.4%.
The Commerce Department also revised down growth figures for previous years.
Instead of growing at a 3.1% annual rate in each year
from 2002 to 2004, the economy actually grew at a 2.8% annual pace, it said.
Downward revisions for investment in information technology and software were the major cause of the weaker growth estimate, it said.
