U.S. Economy Beats Growth Expectations

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The U.S. economy grew at a better than expected 3.3 percent rate in the second quarter, according to a report Thursday from the Commerce Department. But tax rebate checks and the weak dollar fueled the boost, and experts don't expect the healthy economic growth to last.

RENEE MONTAGNE, host:

NPR's business news starts with the economy's surprising strength.

The U.S. economy grew at a rate that was better than expected in the most recent quarter - 3.3 percent. That's according to the latest numbers out from the U.S. government. But economists are still worried about a possible recession, as NPR's Chris Arnold reports.

CHRIS ARNOLD: The economy got a boost from those government stimulus tax rebate checks. Those put a lot of extra spending money in people's pockets. Another big help was the weak dollar, which was a shot in the arm to exporters and manufacturers since it effectively makes the U.S. products cheaper.

Stuart Hoffman is chief economist at PNC Financial Services.

Mr. STUART HOFFMAN (PNC): The U.S. economy was a great beneficiary of weakness in the dollar over the last couple of years, which made our exporters - the Boeings and the Caterpillars and those types of companies that sell overseas have very good orders and bookings, and they were the strong part of the U.S. economy last quarter.

ARNOLD: But most economists don't expect that healthy economic growth to last. The economy still faces some big headwinds. Energy and commodity prices have fallen back some, but they're still elevated, and the U.S. consumer is running out of spending money.

Mr. HOFFMAN: Consumers who are glad to see gasoline prices down the last month or so, are still under the pressure of lower prices, fewer jobs, income that's not keeping up with inflation, and almost rock bottom consumer confidence.

ARNOLD: So Hoffman thinks the second quarter might be the last hurrah for economic growth this year. Many economists expect much more anemic growth or even negative GDP numbers going forward. The one silver lining in that is that it's likely to protect against inflation. In recent weeks there have been signs that inflation is rising, and that would not be good for the economy if it continues.

Chris Arnold, NPR News.

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