U.S. economy picks up pace on housing revival, consumption

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U.S. economy picks up pace on housing revival, consumption

(Xinhua) 15:49, August 30, 2013

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The real gross domestic product (GDP) of the United States expanded at an annual rate of 2.5 percent in the second quarter this year, the best performance since the third quarter of last year, boosted by ongoing recovery of U.S. housing market and household consumption, showed figures from the Commerce Department Thursday.

It has beaten market expectations and is a welcome acceleration from an initial estimate of 1.7 percent released last month. In the first quarter of the year, the U.S. real GDP grew at a meager 1.1 percent, the department said in a report.

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, and residential fixed investment that were partly offset by a negative contribution from federal government spending, said the department.

Real personal consumption expenditures increased 1.8 percent in the second quarter, with durable goods including motor vehicles leading the advance by growing 6.1 percent from April to June.

Personal consumption accounts for about 70 percent of the overall U.S. economic activity, thus being the main engine of the nation's economic growth.

With a housing market recovery, real residential fixed investment surged 12.9 percent in the second quarter, after increasing 12.5 percent in the first quarter, said the report.

Experts held that U.S. housing market started to gain ground since last year, boosted by pent-up demand, an improving job market and low mortgage rates.

"Very low mortgage rates and some improved availability of mortgage credit have provided a sizable boost to the demand for housing. That boost to demand from low mortgage rates and a relatively small inventory of homes on the market has resulted in rising house prices," David Stockton, a senior fellow at the Washington-based Peterson Institute for International Economics, told Xinhua, adding that prospective buyers are less fearful now of buying into a falling market against the backdrop of the firming of home prices.

Better export performance also helped support U.S. economic growth. Real exports of goods and services increased 8.6 percent in the second quarter, compared with a decrease of 1.3 percent in the first quarter.

With the government spending cuts still going on, however, U.S. government's austerity measures continued to be a drag on economic growth, as the real federal government consumption expenditures and gross investment decreased 1.6 percent in the second quarter.

（Editor：LiXiang、Zhang Qian）