U.S. economy expanded at 3.8% last quarter, with boost from consumers

An uptick in consumer spending helped the U.S. economy expand at a surprising 3.8% from April through June, the government reported in a dramatic upgrade of its previous estimate of second-quarter growth.

- BY PAUL WISEMAN

U.S. gross domestic product the nation's output of goods and services rebounded in the spring from a 0.6% first-quarter drop caused by fallout from President Trump's trade wars, the Commerce Department said Thursday. The department had previously estimated second-quarter growth at 3.3%, and forecasters had expected a repeat of that figure.

The first-quarter GDP drop, the first retreat of the U.S. economy in three years, was mainly caused by a surge in imports which are subtracted from GDP as businesses hurried to bring in foreign goods before Trump could impose sweeping taxes on them. That trend reversed as expected in the second quarter: Imports fell at a 29.3% pace, boosting April-June growth by more than 5 percentage points.

Consumer spending rose at a 2.5% pace, up from 0.6% in the first quarter and well above the 1.6% the government previously estimated.

"The U.S. consumer remained a lot stronger than many thought, even in the midst of a stock market selloff and a lot of trade uncertainty," Heather Long, chief economist at Navy Federal Credit Union, posted on social media.