US economic growth rebounded during the second quarter of the year to its strongest pace since the beginning of last year. The reason was a surge in business investment, more government spending and rising exports. The 3.4% annual pace of GDP expansion was the most in more than a year. The last time it was better was the 4.8% rise in the first three months of last year. And it contrasts with the first three months of this year which was an anaemic 0.6%.
President George W Bush said that should reassure the American people: “Inherent net grow is (part of) a free enterprise system, people are working, the unemployment rate is down, wages are increasing, and so I want the American people to take a good look at this economy of ours.”
At the same time figures were released showing that a leading US inflation gauge rose at its slowest pace in four years. That, together with week’s turmoil in the financial markets, make it more likely that the Federal Reserve will need to move its focus from fighting inflation to boosting growth.