US growth revised upwards to 2.5% The US economy grew at an annualised rate of 2.5 per cent in the second quarter after a large upward revision from the initially reported figure of 1.7 per cent. A large revision to trade figures - widely expected following strong trade data for June - was the main source of the change. That suggests the US may not yet be suffering as much as expected from the slowdown in emerging markets. Overall, the revision confirms the US is still stuck in a pattern of mediocre but stable growth around 2 per cent a year, but showing a lot of resilience given big cuts to government spending. The revision is unlikely to make much difference to the US Federal Reserve's decision on when to slow its asset purchases from $85bn a month. The Fed's planned tapering is linked to an expected acceleration of growth later this year and in 2014. "The first half now shows 1.8 per cent annualised GDP growth, an impressively resilient performance as the economy was being hit with a 1.75 per cent of GDP federal fiscal drag," noted Ted Wiseman at Morgan Stanley in New York. After the revisions, net trade neither added nor subtracted to overall growth. The quarter was marked by modest growth in consumption and investment offset by falling government spending. There was 1.2 percentage points of growth from consumption, 0.9 percentage points from investment and a 0.2 percentage point drag from government spending. The difference came from 0.6 percentage points in inventory build-up, suggesting that the underlying pace of growth remained at around 2 per cent, implying the pace of expansion may not carry on into the third quarter. The figures highlight a continuing disconnect between relatively strong jobs growth this year and the weaker expansion of gross domestic product. Gross domestic income, an alternative measure of the economy, is up by 2.7 per cent over the last four quarters compared with 1.7 per cent for gross domestic product. GDP is often revised towards GDI when the two diverge. "This report . . . adds to the likelihood that the apparent disconnect between employment and GDP will be closed with GDP moving up rather than employment down," said Jim O'Sullivan, chief US economist at High-Frequency Economics in New York. Corporate profits bounced back from a fall in the first quarter - rising by 3.9 per cent on a quarter-on-quarter basis - but an even bigger rise in dividend payments meant that corporate cash flow declined. That may reduce the chances of a strong rebound in investment which is one of the main hopes for an acceleration of growth in the second half and into next year.