U.S Economy rebounds slightly in second quarter

U.S. economic growth has likely rebounded moderately in the second quarter as companies boosted exports and maintained a strong pace of spending on equipment.

Reports said this could assuage financial market fears that the economy was already in recession.

The Commerce Department’s advance second-quarter GDP report on Thursday will, however, still show that the economy was losing momentum because of high inflation that has prompted the Federal Reserve to aggressively tighten monetary policy.

GDP growth is reported to have likely rebounded at a 0.5% annualised rate last quarter. Estimates ranged from as low as a 2.1% rate of contraction to as high as a 2.0% growth pace.

The reports prompted JPMorgan to upgrade its second-quarter GDP growth estimate to a 1.4% rate from a 0.7% pace.

Goldman Sachs raised its forecast by 0.6 percentage point to a 1.0% rate. Several other Wall Street banks also boosted their estimates. The Atlanta Fed lifted its estimate by four-tenths of a percentage point to a still negative 1.2% rate.

A slew of soft housing data as well as weak business and consumer sentiment surveys had heightened expectations for a second straight quarterly negative GDP reading. The economy contracted at a 1.6% pace in the first quarter.

Reuters/Hauwa Abu