US second-quarter GDP revised higher as businesses boost investment in AI

• The U.S. economy grew faster than initially thought in the second quarter, in part driven by business investment in intellectual property such as artificial intelligence (AI), but tariffs on imports continued to cloud the picture.
• The upgrade to the gross domestic product (GDP) reported by the Commerce Department on Thursday also reflected upward revisions to consumer spending as well as business investment in equipment. That resulted in a measure of underlying domestic demand also being revised higher.
• GDP increased at a 3.3% annualised rate last quarter, the Commerce Department's Bureau of Economic Analysis (BEA) said in its second estimate. The economy was initially reported to have grown at a 3.0% pace in the second quarter. Economists polled by Reuters had expected GDP growth would be raised to a 3.1% rate.
• The GDP revision reflected upgrades to business spending on intellectual property products, now estimated to have expanded at a 12.8% rate, double the initially estimated 6.4% pace and the fastest in four years. Growth in business investment in equipment was revised up to a 7.4% pace from the 4.8% rate estimated last month. Growth in consumer spending, the economy's main engine, was raised to a 1.6% rate from the previously reported 1.4% pace.
• Economists expect a lacklustre second half, which would limit economic growth to about 1.5% for the full year. That reading would be down from 2.8% in 2024.

(Source: Reuters)