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US economy grows at 4.2% rate in Q2: Commerce Dept.

WASHINGTON -- After a bleak start to the year, the U.S. economy grew at a brisk annual rate of 4.2 percent in the April-June quarter, the government said Thursday, slightly faster than it had first estimated.

The upward revision supported expectations that the second half of 2014 will prove far stronger than the first half.

The Commerce Department's second estimate of growth for last quarter followed its initial estimate of 4 percent. The upward revision reflected stronger business investment in new equipment and structures than first thought.

The seasonally adjusted 4.2 percent annual growth rate for the gross domestic product — the nation's total output of goods and services — came after the economy had shrunk at an annual rate of 2.1 percent in the January-March quarter. That was the biggest economic decline since the depths of the Great Recession.

The first-quarter decline had reflected mainly the effects of a harsh winter that kept consumers away from shopping malls, disrupted factory production and depressed the economy.

In its second estimate of growth for the April-June quarter, the government said companies' restocking of supplies contributed less than it had first estimated. But a higher trade deficit subtracted less from growth than initially estimated.

The downward revision in inventory building will likely help boost growth in the current July-September quarter because it means that businesses may need to restock their supplies to meet demand.

With the wild swing between the first quarter's sharp slump and the vigorous rebound in the second quarter, annual economic growth has averaged a meager 1.1 percent for the first six months of this year. Still, most analysts think the economy has regained momentum as the job market has strengthened. They foresee a healthy annual growth rate of around 3 percent in the current quarter and in the final three months of the year.

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