US Economy Grew at 4.2 Percent Annual Rate in Second Quarter

(CN) - The U.S. economy grew at a strong 4.2 percent annual rate in the second quarter, the best showing in nearly four years, the Commerce Department said Wednesday.

The latest numbers from the government are a significant improvement from a 2.2 percent gain during the first three months of the year.

But economists on Wednesday were quick to say that much of the second quarter's robust growth was due to temporary factors like the surge in U.S. exports that occurred before Trump administration tariffs were to take effect.

They expect the growth to slow to a 3 percent annual rate the rest of the year.

If that holds true, it would be the best performance by the economy since 2005, two years before the Great Recession began.

Some economists said Wednesday's upward revision to GDP would give the Fed, which has already raised rates twice this year, leeway to do so twice more before year's end, as it has signaled it expects to do.

In other economic news, the National Association of Realtors reported Wednesday that fewer Americans signed contracts in July to buy homes compared to the previous month.

According to the association, pending home sales index fell 0.7 percent last month to 106.2. During the past year, contract signings have tumbled 2.3 percent as home values have climbed at roughly double the pace of average wage growth.

Pending sales in July fell in the West and South, but they rose in the Northeast and Midwest. Sales in all four geographic regions have declined over the past year, with the sharpest drop in the West where homes are generally more expensive.

Pending sales are a barometer of home purchases that are completed a month or two later.

The association said last week that sales of existing homes have declined for the past four months.

The Associated Press contributed to this report.

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