The U.S. economic growth went up, surpassing estimates, and it's all thanks to the consumers' spending.
According to the U.S. Department of Commerce (USDC), the Gross Domestic Product (GDP) clocked in at a 1.4 percent annual rate, which was previously expected to be at 1 percent in the second estimate.
Consumer spending reportedly kept the U.S. economy up, whereas local government spending plus exports dipped, based on the report of the USDC. This was echoed by Nariman Behravesh, an economist at IHS.
"Consumer spending and housing are keeping the economy going, despite major drags from net exports, capital spending and an inventory cycle," Behravesh says.
Needless to say, the figures aren't exactly set in stone. That means they can only provide an idea of the economic health at best. However, there is another number that can be relied on to measure the economy's standing, and that's the Gross Domestic Income (GDI).
The difference between the two is that the GDP is focused on the expenditure, whereas the GDI is centered on the income in producing goods and services. Of course, the two should be in accordance with each other, but because they are computed differently, slight errors are bound to come up.
"I am uneasy with the growth rate of the USA economy – it has as much chance of improving as declining based on the syntax of all the global events. This makes forecasting problematic – as a few well-placed economic 'bombs' can easily blow up any forecast," Steven Hansen, cofounder of Econintersect, says.
Now, the GDI this time around rated at 0.9 percent, which corresponds with the recent GDP figure.
At any rate, a recession is not going to occur any time soon, and the revision indicates a possible potential outlook moving forward.
"The consumer is back in the driver's seat. There is no sign of recession in these data, so this will put a smile on Fed officials' faces and argues for their policy of gradual interest-rate normalization to continue," Chris Rupkey, the head economist at MUFG Union Bank, says.
