Updated from 9:40 a.m. EDT
Growth in the U.S. economy outpaced economists' estimates in the second quarter, the government's final figures show.
Gross domestic product
, a broad measure of the nation's economic activity, rose 5.6% in the second quarter, the
said Thursday. It was the government's final revision to the figure after releasing two preliminary estimates. In its second estimate last month, the government
said GDP rose at a 5.3% annual rate, up slightly from July's initial estimate of 5.2%.
The final figure topped the consensus estimate of a group of economists polled by
, which has predicted a final number of 5.4%. The economy grew at a 4.8% annual clip in the first quarter.
"It was a little bit surprising, this three-tenths revision," said Anthony Karydakis, senior financial economist at
BancOne Capital Markets
, explaining that the final GDP figure is usually little changed from the second estimate. "It's another reminder of the strong pace of growth in the economy."
The growth in domestic product was mainly due to a buildup in inventories and higher government spending, according to the Commerce Department.
Consumer spending was revised upward slightly to 3.1%, compared with the 2.9% previous estimate. And the price index for gross domestic purchases, a key inflation gauge that measures prices paid by U.S. residents, increased 2.1%, vs. the previous estimate of 2.3%.
Real final sales -- which excludes inventories -- was revised upward to 3.9%, from the earlier estimate of 3.5%.
After-tax corporate profits rose $27.3 billion, compared with an increase of $43.1 billion in the first quarter.
When the government
released its first estimate of second-quarter GDP in July, the robust 5.2% rate stunned economists, who expected growth to be around 3.8%. The rapid increase raised the specter of an interest rate hike by the
Federal Open Market Committee
. However, economic indicators released then, such as ones showing a moderation in the housing and manufacturing sectors, convinced policymakers that the economy was cooling sufficiently.
"The bottom line is that the economy is showing signs of moderation in the last few months," Karydakis said.
Most economists were focused on the initial figure for third-quarter GDP, which will be released in late October. "It's clearly going to be the softest quarter in some time," said Karydakis, who expects third-quarter economic growth at around 3%.
Bruce Steinberg, chief economist at
, also expects third-quarter growth at close to 3%, with a rebound in the fourth quarter to about 4%, which will preclude any easing of interest rates by
And while slowing economic growth bodes well for the fight against inflation, it will also take its toll on corporate profits.
"The economy is still growing at a healthy pace, but any moderation in growth will lead to some slowing in earnings momentum," Steinberg said.