Don't look now, but the economy is back. After a dismal winter that saw gross domestic product shift into reverse, the latest government data released Thursday shows the economy bounced back sharply in the spring. The Commerce Department said that GDP expanded at a 4.2 percent annual rate in the second quarter instead of the previously reported 4 percent pace. But the improvement is more than a one-time rebound. Across a broad range of data, the economy continues gradually to gain strength. There are signs the deep slide has finally given way to what economists call a "virtuous cycle"— where improvement in one part of the economy feeds into the others, creating a self-sustaining expansion. This year's convincing job gains are boosting consumer confidence and—more importantly—helping to shore up household finances. Americans continue to pay down debt, which together with low interest rates has helped reduce the cost of paying off mortgages, car loans and other forms of borrowing. Lower borrowing costs have helped boost savings.
IN DEPTH
- US economy forecast to grow by 1.5 percent in 2014
- Labor Market Still Hurting, Yellen Urges Fed Caution on Rate Hikes
- Job Growth Slows in July; Jobless Rate Edges Up
- John W. Schoen, CNBC.com
