NEW YORK (CNN) – The U.S. economy has turned around what was a weak winter. So what’s behind the turnaround?
The U.S. gross domestic product grew a whopping 4% in the second quarter. GDP is the best measure of the economy’s health, a tally of all U.S. goods and services, and that 4% is even better than what economist’s were expecting.
It also means that the deep contraction earlier this year can be blamed mostly on bad weather. Even that number wasn’t as bleak as first reported. It turns out the economy contacted 2.1% in the first three months of the year, not 2.9%.
So what changed in the second quarter? Well we emerged from a frigid winter ready to spend. Consumer spending, which makes up about two-thirds of economic activity, ramped up this spring. We spent our money on big ticket items like cars, appliances and furniture.
Americans weren’t the only ones buying. Foreign countries grabbed up U.S. exports. Business investments also went up.
The second quarter GDP numbers could mark the end of a strange disconnect: the first 6 months of 2014 experienced the strongest hiring in 8 years, while the economy didn’t even grow! This report could signal the overall economy is back on track.