Economy Grows Despite High Energy Costs

The economy clocked in at a chipper 3.4 percent annual growth rate in the second quarter, fresh evidence the country's business climate is healthy despite surging energy costs.

The solid increase in the gross domestic product for the April-to-June quarter, reported by the Commerce Department on Friday, came on the heels of a larger 3.8 percent growth rate in the opening quarter of this year. GDP measures the value of all goods and services produced within the United States and is considered the broadest barometer of the country's economic standing.
Despite the toll of elevated energy prices, consumers and businesses still managed to boost spending and investment modestly, helping to underpin overall economic growth in the second quarter.

The main reason why growth slowed in the second quarter compared with the first was that businesses were working off excess supplies of goods. That actually subtracted 2.32 percentage points from GDP. In the first quarter, businesses had bulked up their inventories.

The showing for the second quarter was slightly lower than the 3.5 percent pace that economists were forecasting before the release of the GDP report.

In other economic news, the Labor Department reported that workers' wages and benefits grew by 0.7 percent in the second quarter_ the same as the first quarter. That suggested that recovery in the job market isn't fanning inflation on the compensation front.