GDP jumps 3.3% as exports, consumer spending surge
By Martin Zimmerman
Los Angeles Times
Tax rebate checks and robust exports helped the U.S. economy grow at a faster-than-expected rate in the second quarter, the government reported yesterday. But some economists warned that those two factors can't prop growth up for long.
U.S. gross domestic product increased at a 3.3 percent annual pace in the April-June quarter, according to the Commerce Department. That was the best showing since the third quarter of 2007, beating the government's earlier estimates of a 1.9 percent growth rate and topping economists' forecasts of 2.7 percent.
The GDP measures the value of all the goods and services produced by the United States and is considered the best gauge of the nation's overall economic well-being.
The government attributed the increase to accelerating exports and a falloff in imports, a rise in spending by consumers and by state and local governments, and signs of improvement in the housing sector.
Exports grew at a 13.2 percent rate in the quarter, more than double the first-quarter rate. Consumer spending rose 1.7 percent, the biggest increase in nearly a year, as government rebate checks of up to $600 per person sent shoppers scurrying to malls and big-box retailers.
"We're pleased with the numbers. We think that they are heading in the right direction," White House spokeswoman Dana Perino said. But "no one's doing a victory dance."
The report gave a boost to Wall Street, where the Dow Jones industrial average gained more than 200 points. Lower oil prices also helped push stocks higher.
However, some economists questioned whether those factors can sustain economic growth through the second half of the year and into 2009.
"We can't be overly upbeat about this particular report," said Bernard Baumohl, chief global economist at the Economic Outlook Group in Princeton, N.J. "Yes, it was a lot higher than people expected, but conditions are dramatically different now than they were in the second quarter."
The last of the government stimulus checks went out early in July, Baumohl noted, and their one-time boost to consumer spending is largely over.
In addition, the global economy is starting to slow, which could dampen the appetite for U.S. goods abroad. That could be especially true in Europe, where weakening economic conditions are helping pump up the dollar in relation to the euro. A stronger dollar makes U.S. exports more expensive.
"The fact that foreign demand for our goods has been supporting the U.S. economy puts us in a very precarious situation should world economic growth slow more than expected," said Ellen Beeson Zentner, senior U.S. economist for the Bank of Tokyo-Mitsubishi UFJ in New York.