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This morning's report suggests that the USA economy is on a more solid footing than previously thought with growth revised up more than expected - albeit on par with our own call.

Hitting the White House growth target for the first time in Mr Donald Trump's presidency, gross domestic product (GDP) increased 3 per cent in the April-June period, the Commerce Department reported.

The economy picked up from a 1.2% rate in the first quarter.

The bureau will release its third estimate for the second quarter of 2017 on September 28.

Growth at an annualised pace was 2.1% in the fourth quarter of 2016.

Consumer and business spending was higher than previously estimated, the US Bureau of Economic Analysis said. Economists had expected that second-quarter GDP growth would be raised to a 2.7% rate.

Despite the acceleration in consumer spending, inflation remained benign in the second quarter.

Nonresidential fixed investment rose 6.9 per cent, up from an initial estimate of 5.2 per cent. Outlays on intellectual property products, structures and equipment were revised upward.

Spending by governments, which had grown 0.7 per cent in the initial estimate, was revised to a decline at a 0.3 per cent rate.

The upward revision to consumer spending reflected upward revisions to exports, federal government spending and private inventory investment.

The GDP report wasn't the only piece of sunny economic news on Wednesday.

Against the euro, the dollar rose 0.3% to $1.1933 and gained 0.4 against Japan's yen to Y110.16. That was up from the government's original estimate of a 1.9% gain. GDP has averaged annual growth rates of just 2.2 percent in this recovery, which is now the third longest in USA history.

During last year's presidential campaign, Trump repeatedly attacked the Obama administration's economic record.

The growth is "impressive given the lack of policy reforms out of Washington D.C.", said Joseph Brusuelas, chief economist at RSM, a tax and consulting firm.

President Donald Trump has repeatedly cited as his goal raising United States economic growth at an annual rate of 3 percent after eight years in which former President Barack Obama could not reach this benchmark in any quarter. Some are now saying that the devastation from Hurricane Harvey could shave about a half-percentage point off growth this quarter.

Economists surveyed by MarketWatch expected a smaller upward revision in second-quarter GDP to a 2.8% rate.

For the whole year, Zandi forecasts GDP will grow 2.1 percent.

Mark Zandi, chief economist at Moody's Analytics, forecasts annual growth of 2.1%.

Zandi is forecasting that growth in 2018 will be an even stronger 2.8 per cent.


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