August is a time when many of us plan vacations with family and friends in order to reconnect. The recently released report on second quarter economic growth, as measured by gross domestic product (GDP), shows the U.S. economy is also taking the time to “reconnect” this summer, with the economy’s underlying fundamental strength reconnecting with economic growth after weather-related weakness in the first quarter.
Inflation-adjusted, or real, GDP rose at a 4.0% annualized rate in the second quarter of 2014, and revised data show GDP growth was 3.5% or higher in three of the past four quarters dating back to the third quarter of 2013. The exception was the 2.1% decline in GDP in the first quarter of 2014, which now looks even more like a weather-related outlier, resolving the disconnect between underlying economic strength and economic growth. GDP is the broadest measure of the nation’s economic output, and the report is closely watched. The data released so far for the third