28 August 2003, 16:41  US second-qtr revised up, boosted by defense

WASHINGTON, Aug 28 - Soaring defense spending pushed U.S. economic growth in the second quarter to a faster pace than previously thought, the government said on Thursday in a report that was the latest in a string of data indicating the economy is on the mend. Gross domestic product, or GDP, grew a revised 3.1 percent in the second three months of the year, the Commerce Department said - a figure broadly in line with Wall Street expectations for a 3.0 percent gain. That was up from the 2.4 percent rise estimated a month ago and followed anemic 1.4 percent growth in each of the two prior quarters. It was the fastest expansion since the third quarter of last year and is likely to bolster hopes for strong growth in the current quarter. Spending on defense, much of it to pay for the U.S.-led war in Iraq, surged 45.9 percent, up from the 44.1 percent estimated a month ago. This was the strongest gain since the third quarter of 1951, during the Korean War.
In a sign that business confidence is returning, nonresidential spending - the broadest category of investment - rose 8.0 percent in the spring quarter, up from the 6.9 percent reported a month ago, after a drop of 4.4 percent in the first quarter. Business investment, touted as a key to economic recovery, has lagged since the 2001 recession. Consumers, who fuel two-thirds of national economic activity, were also in a buoyant mood with consumer spending rising 3.8 percent.//

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