File Photo: Stacks of U.S. 100 dollar notes are pictured at the headquarters of the Korea Exchange Bank in Seoul Aug. 2, 2011. (Xinhua/REUTERS)
WASHINGTON, Aug. 29 (Xinhua) -- U.S. economic growth was revised to an annual rate of 4.2 percent in the second quarter of this year, slightly higher than the 4.1 percent previously estimated, the U.S. Commerce Department reported on Wednesday.
The strong growth in the second quarter was powered by a rebound in consumer spending, business investment and exports, according to the department.
Personal consumption expenditures, which account for more than two thirds of the overall economy, grew at an annual rate of 3.8 percent in the second quarter, slightly lower than 4 percent previously estimated but higher than the 0.5 percent growth in the first quarter.
Nonresidential fixed investment, a measure of corporate spending on structures and equipment, grew at an annual rate of 8.5 percent in the second quarter, up from an earlier estimate of 7.3 percent.
Revised data also showed that net exports added 1.17 percentage points to the second quarter economic growth, compared with an earlier estimate of 1.06 percentage points.
But trade is more likely to become a drag on the U.S. economic growth in the months ahead, as the United States escalates trade frictions with its major trading partners, analysts said.
Federal Reserve officials had warned that an escalation in international trade disputes was a potentially "consequential downside risk" for the U.S. economy, according to the minutes of the Fed's latest monetary policy meeting.
"Participants observed that if a large-scale and prolonged dispute over trade policies developed, there would likely be adverse effects on business sentiment, investment spending, and employment," said the minutes of the Fed's July 31-Aug. 1 meeting released last week.
"Moreover, wide-ranging tariff increases would also reduce the purchasing power of U.S. households. Further negative effects in such a scenario could include reductions in productivity and disruptions of supply chains," the minutes said.
Economists also believed that the U.S. economic growth is likely to slow down in the second half of the year as the fiscal stimulus gradually fades and the Federal Reserve further increases interest rates.
The U.S. economy is expected to grow at 2 percent in the third quarter of the year, according to the forecast released by the Federal Reserve Bank of New York last week.
The Fed in June estimated that the U.S. economy would grow at 2.8 percent this year, still below the Trump administration's target of over 3 percent of annual growth rate.