US economic growth in the second quarter was stronger than previously reported, helped by stronger business investments and consumer spending.
The Commerce Department's second estimate of Q2 gross domestic product released Wednesday printed at 3%. Economists had forecast a slight increase to 2.7% from 2.6% on the back of stronger consumer spending.
President Donald Trump had set a 3% target for long-term economic growth. Following just 1.2% GDP in the first quarter, the economy would need to continue growing at this pace to hit Trump's mark on an annual basis for this year. Treasury Secretary Steven Mnuchin has said it would take up to two years for the economy to sustain this pace, while some economists have said it's a target too high.
Personal consumption, the biggest contributor to economic growth, was revised up to 3.3% from 2.8%. It was led by spending on housing, utilities, prescription drugs, and cellphone services.
A third estimate of GDP based on more complete data will be released September 28.
Amid the tragedy of Hurricane Harvey, economists are estimating how it could impact third-quarter growth.
"Our point estimate remains for a small drag on growth in Q3: measured Q3 real GDP growth will be only slightly (~0.1ppt QoQ SAAR) lower due to Harvey," said Citi's Andrew Hollenhorst in a note Tuesday.
"The output reduction could be greater if the disruption is longer lasting or if there are larger knock-on effects outside the region. For instance, stoppages at oil refineries could curtail activity further down the supply line."
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