U.S. economic growth accelerated in the April-June quarter to a seasonally adjusted annual rate of 1.7 percent, as businesses spent more and the federal government cut less.
The Commerce Department says growth improved from a sluggish 1.1 percent rate in the January-March quarter, which was revised from an initial 1.8 percent rate. The pickup in growth was surprising as most economists predicted a far weaker second quarter.
Consumers increased their spending more slowly in the second quarter. And a surge in imports reduced growth by the most in three years. But the federal government cut spending only 1.5 percent. And state and local governments increased spending for the first time in a year.
Economists are hopeful that growth could improve to around 2.5 percent in the third and fourth quarters.