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US economy smashes expectations with 1.7% Q2 growth

by Sarah Miloudi on Jul 31, 2013 at 14:29

US economy smashes expectations with 1.7% Q2 growth

US GDP has risen sharply to 1.7%, beating economists' expectations.

America's real growth rate accelerated from 1.1% to 1.7% over the second quarter, reflecting a recovery that is gaining momentum, and a growth rate well above the 1% consensus had predicted.

Capital Economics said the figures will no doubt bolster the Federal Reserve's resolve to taper quantitative easing, particularly since officials revealed consumption had risen by 1.8%, down only slightly from a 2.3% gain during the first three months of the year.

'Together, those increases suggest that households have coped well with higher taxes,' Capital's Paul Ashworth, chief US economist, said, pointing out that changes to levies earlier this year were not squeezing consumers too hard.

Following the data, the UK's FTSE 100 was up 0.76% at 6,622, while across the Atlantic, the Dow Jones Industrial Average was positioning for a slight 0.15% fall.

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