That economic growth was less than expected, but the first quarter's results were sharply revised upward. Fred Katayama reports.
The U.S. economy gaining momentum in the second quarter. The government's initial read said GDP grew at an annual rate of 2.3 percent. That was a bit shy of expectations. But the first quarter's results were revised sharply upward to mark growth of 0.6 percent instead of a contraction. Fueling expansion in the last three months: consumer spending, housing, and exports. Consumers loosened their wallets, encouraged by an improving job market and falling gas prices. The tightening labor market also boosted housing. And despite the strong dollar, exports rebounded. A West Coast port slowdown had hurt trade in the previous quarter. Barclays Capital's chief U.S. economist Michael Gapen: SOUNDBITE: MICHAEL GAPEN, CHIEF U.S. ECONOMIST, BARCLAYS CAPITAL (ENGLISH) SAYING: "This report certainly keeps the Fed on track for a rate hike later this year, we are saying September. We think the data in terms of GDP from today, consumption in particular, the PCE inflation report next week and employment will all be enough to get the Fed to move in September." Two areas of weakness: business equipment spending and energy. Mining-related spending plunged more than 68 percent amid the sharp drop in crude oil prices. But the growth in consumer spending and exports helped offset that.