What That 4 Percent GDP Growth Spurt Really Means

What's Hot

Do This or Your iPhone Bill May SkyrocketSave

23 Upgrades Under $50 to Make Your House Look AwesomeAround The House

Trump Worth $10 Billion Less Than If He’d Simply Invested in Index FundsBusiness

11 Places in the World Where You Can Afford to Retire in StyleMore

What You Need to Know for 2017 Obamacare EnrollmentFamily

8 Things Rich People Buy That Make Them Look DumbAround The House

32 of the Highest-Paid American SpeakersMake

Amazon Prime No Longer Pledges Free 2-Day Shipping on All ItemsMore

More Caffeine Means Less Dementia for WomenFamily

9 Tips to Ensure You’ll Have Enough to RetireFamily

5 DIY Ways to Make Your Car Smell GreatCars

30 Awesome Things to Do in RetirementCollege

5 Spots Where Retirees Can Live for Less Than $40,000Real Estate

10 Ways to Pull Together the Down Payment for a HomeCredit & Debt

10 Ways to Reduce Your Homeowner’s Insurance RatesFamily

50 Ways to Make a Fast $50 (or Lots More)Grow

After a dismal first quarter, U.S. gross domestic product rebounded in the past three months. Does that mean the economy is finally heating up?

After a 2.1 percent contraction in the first quarter, U.S. economic growth surpassed estimates in the second quarter, as gross domestic product surged 4 percent. Sounds reassuring, no?

Analysts and economists had predicted growth at 2 to 3 percent, Reuters said.

But before you get too excited about the uptick in the U.S. economy, The Washington Post said you need to consider this: “The bad news is that this latest upswing isn’t one so much as a reversion to the mean.”

The Post said consumer spending growth remained unchanged, as did fixed investment. The biggest growth came from inventory spending, which took a nosedive in the first quarter, then bounced back in the second. According to the Post:

In fact, inventories made up 1.66 of the 4 percentage points of growth this quarter. And that, unfortunately, won’t carry over into the future, since businesses won’t need to restock for a while. In other words, once you account for inventories, the economy wasn’t really as weak as it seemed at the start of the year, and it’s not as strong as it does now. It’s just been the same the whole time: meh.

In addition to business inventory growth, consumer spending increased by 2.5 percent in the second quarter, Reuters said.

Economic growth has remained relatively stable in recent years, mostly expanding by about 2 or 3 percent, The New York Times said. And while slow, steady growth can be good, the Times said the U.S. economy is still performing far below potential.

That growth rate would be just fine in normal times, when the economy is humming along with full employment. But it’s disappointing given that the economy still appears to be functioning below its potential, with unemployment high and businesses still not producing at full capacity.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Taco Bell Is Handing Out Free Food for World Series Stolen Bases

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,674 more deals!