2018.07.2709:19:00UTC+00U.S. Economic Grows Shows Significant Acceleration In Q2

Economic growth in the U.S. saw a significant acceleration in the second quarter, according to a report released by the Commerce Department on Friday.

The report said real gross domestic product jumped by 4.1 percent in the second quarter following a 2.2 percent increase in the first quarter. Economists had expected GDP to surge up by 4.2 percent.

The faster rate of GDP growth reflected accelerations in consumer spending and exports, a smaller decrease in residential fixed investment, and accelerations in federal government spending and in state and local spending.

Meanwhile, the Commerce Department said the movements were partly offset by a downturn in private inventory investment and a deceleration in non-residential fixed investment.

"In terms of the outlook, trade tariffs and worries about protectionism appear to be making business a little cautious, but we have to remember that the effective tax hike from the tariffs enacted so far are dwarfed by the $1.5 trillion dollars of tax cuts on wages and profits," said James Knightley, Chief International Economist at ING.

He added, "As such household incomes and corporate cashflows are in great shape with the high frequency data suggesting the US has good momentum for the second half of the year."

The Commerce Department also said its reading on core consumer prices, which exclude food and energy prices, showed the annual rate of price growth slowed to 2.0 percent in the second quarter from 2.2 percent in the first quarter.