America’s Stellar Spring Quarter

What’s Going On Here?

Boom! Data released on Wednesday showed that the American economy expanded by more in the second quarter than had been previously recorded.

What Does This Mean?

The data showed that the US economy grew at an annualized rate of 3% from April to June of this year, significantly better than the 2.6% growth rate initially reported.

Relatively strong consumer spending helped boost growth compared to the first quarter of the year. Meanwhile, Wednesday’s data also showed that corporate profits in America jumped by about 7% in the same period, which, if sustained, would suggest that companies will continue hiring more people and investing more money throughout the rest of 2017 – both of which would help the US economy keep up its newfound momentum (the economy appeared to be a bit weaker at the very beginning of the year).

Why Should I Care?

For markets: The data was good news for the dollar. 
The dollar jumped more than 0.5% versus other major currencies following the news (remember, international investors tend to invest in growing economies and, as they do so, push up the value of the economy’s currency). The jump was a moderate turnaround from what’s been a very weak year for the US dollar so far (it’s still down almost 10% versus other major currencies).

The bigger picture: Stronger economic growth is a reason for investors to be optimistic. 
Stocks have had a rougher ride in August than they did compared to earlier this summer (and commentators continue to point out some potentially big near-term risks), but there are still reasons for investors to remain optimistic about stocks. There are numerous signs that US economic growth – alongside growth in Europe – is improving, and stocks are typically one of the biggest beneficiaries of a growing global economy.

Enjoy the read!

(Compiled from various data links and related articles)