In the second quarter the U.S. economy grew at its fastest pace in 2-1/2 years with all sectors contributing to the jump in output in a bullish signal for the remainder of the year.

The Bureau of Economic Analysis reported that the Real GDP increased at an annual rate of 4.6 percent in the second quarter of 2014, according to the third estimate. In the first quarter, real GDP decreased 2.1 percent. And today’s result was even better than the 4.2 percent estimate made a month ago.

BEA continues: “The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.” Consumer spending which accounts for more than two-thirds of economic activity grew at a 2.5 percent annual rate.

That was in line with Wall Street's expectations. The markets were slightly higher in early trading after a big selloff on Thursday. The Standard&Poor’s 500 Index stands now at 1969 points which is just flat compared to yesterdays close.

The strong growth pace and domestic demand growth help to explain the robust job gains during the quarter, as well as the sharp decline in the unemployment rate.

Economists believe the economy is growing above 3 percent in the current July-September quarter. But because of the rough start to the year with a terrible winter that kept many consumers from shopping, growth for all of 2014 is expected to be a lackluster 2.1 percent, little changed from last year's 2.2 percent GDP increase.

The outlook for 2015 is much better. Analysts say that the economy is finally entering a period of above-trend growth as unemployment level falls. Yesterday’s jobless claims are pointing in that direction.

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