WSJ: Economy Had a Strong Spring, Latest Revision Shows

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The latest government economic revision shows the U.S. economy was growing at a much stronger clip this spring than previously realized, powered by consumer spending.

Business investment in software and the equipment powering artificial intelligence also helped. Spending on intellectual property like research and development and software rose at a revised 15% annual rate, the most since 1999, which economists touted as a positive sign for future productivity growth.

Americans spent more than initially estimated in the second quarter on services such as restaurants, health care, insurance and transportation. Services spending drives the lion’s share of U.S. economic output.

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Overall, the government now estimates gross domestic product increased at a 3.8% seasonally and inflation-adjusted annual rate in the second quarter, up from an initial estimate of 3% made in July and a later update to 3.3%. That was the strongest quarterly growth in nearly two years.

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Retail sales, which increased at a solid clip in July and August, represent another sign of economic resilience, for example. At the same time, a summertime hiring slowdown has raised worries about the health of the U.S. labor market. Inflation also remains higher than the Federal Reserve wants as companies deal with President Trump’s new tariffs on foreign imports this year.

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