Fastest Economic Expansion in 6 Yrs.

The Commerce Department said on Wednesday that the economy had expanded at an annual rate of 3 percent in the second quarter of the year, better than initially estimated, and a substantial acceleration over the first quarter's lackluster 1.2-percent pace.

The numbers show broad-based growth driven by household spending and exports, particularly in the energy sector.

Figures released Thursday morning by Statistics Canada showed this country's gross domestic product grew by 1.1% between March and June, an improvement from the 0.9% growth seen in the previous three-month period. And if that growth is better than expected led to a feeling more positive, economists at RDQ Economics, and maintain their estimate of potential growth " well below 2 % ".

President Donald Trump's administration has set a goal of 3 percent economic growth for the year, but some economists have said that's unlikely.

Business investment spending has been a laggard through most of this expansion but appears to be perking up this year. GDP has averaged annual growth rates of just 2.2 percent in this recovery, which is now the third longest in US history.

"Even as we see daylight in today's economy, we find ourselves in the shadow of daunting longer-term challenges to economic growth and shared prosperity", said John Williams, president of the Federal Reserve Bank of San Francisco, in an August 2 speech.

Indeed, families appeared to have room to both spend and save more, with the household savings rate rising a notch, to 4.6 per cent from 4.3 per cent in the first quarter.

"We just announced that we hit 3 percent in GDP".

Anderson expects growth in the range of 3 percent to 3.5 percent in the current quarter, but he said the hurricane could shave as much as 0.3 percentage points off that figure.

The central bank has raised interest rates twice this year but some market players doubt the Fed will hike a third time by December in light of persistently weak inflation.

Adding to support for the loonie, USA crude oil prices rebounded after being pressured this week by Tropical Storm Harvey, which knocked out about a quarter of US refinery capacity.

Growth estimates for Q3 are being projected as high as 3.4 percent and seems to be starting off on the right foot.

Earlier this month, Container Store Group's CFO Jodi Taylor said that the company "has seen solid growth in the higher-ticker portion" and holds "the opinion that the customer is still spending".

Government spending fell at a 0.3% pace in the second quarter, with growth in military expenditures offset by declines in federal nondefense spending and outlays by state and local governments.

The GDP report was enough for CIBC chief economist Avery Shenfeld to change his mind.

  • Tracy Klein