Strong second quarter GDP growth backs the case for the Fed to hike interest rates. Fred Katayama reports.
The U.S. economy expanded faster than expected in the second quarter. The final report was upwardly revised to 3.9 percent. Driving that growth: consumer spending and construction expenditures. Morningstar's Robert Johnson. (SOUNDBITE) ROBERT JOHNSON, DIRECTOR OF ECONOMIC ANALYSIS, MORNINGSTAR (ENGLISH) SAYING: "The inventories were a less of a contributor, and consumer spending, especially on services was revised up, as were a lot of the construction numbers to a lesser amount that were in the report. So, it was a really high-quality revision, and it sets us up well for a good second half, and, probably, one of the best full years of GDP growth of this recovery." He says that backs the case for the Fed to hike interest rates this year. And that could come as early as October if the next jobs report is strong. Fed Chair Janet Yellen left that door open in a speech on Thursday. (SOUNDBITE) FEDERAL RESERVE CHAIR JANET YELLEN (ENGLISH) SAYING: "Most FOMC participants, including myself, currently anticipate that achieving these conditions will likely entail an initial increase in the federal funds rate later this year, followed by a gradual pace of tightening thereafter." The Fed has two more chances to tighten this year at policy meetings in October and December.