The Canadian economy surged in the second quarter, surpassing already elevated expectations, and recorded its best 12-month run in over a decade, securing its title as the hottest performer so far in 2017 among Group of Seven countries.
Exports, particularly in the form of energy products, also gave a lift to real GDP in the second quarter.
The central bank's policy rate sits at 0.75 per cent, after it was raised in July for the first time in almost seven years. This gives the USA its strongest quarter since 2015.
US second-quarter growth was revised upward to the fastest pace in two years on stronger household spending and a bigger gain in business investment, putting the economy on a stronger track, Commerce Department data showed Wednesday.
Growth in the second quarter was "above the trend for the expansion" but came "after a below-trend pace" in the first quarter, said Jim O'Sullivan, chief USA economist at High Frequency Economics, in a note to clients. Trump submitted a budget to Congress in May that was based on achieving growth rates in coming years of 3 percent on a sustained basis. But earnings began to recover past year as crude prices stabilized, and exporters are getting a boost because the dollar has weakened since early 2017. Even with the upward revision, the weak start to the year means that growth over the past six months has averaged 2.1 percent, the same modest pace seen for the recovery that began in mid-2009. Business carried most of the economy in the second quarter and equipment accounted for 8.8 percent.
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While the devastation from Hurricane Harvey is likely to hurt the economy along the Texas Gulf Coast, economists don't expect the impact on the U.S.as a whole to be drastic.
"The consumer is in the driver's seat in terms of economic growth", said Scott Anderson, chief economist at Bank of the West in San Francisco. "Odds of a September rate hike by the Bank of Canada are certainly enhanced by this report". "That's some numbers. And I happen to be one that thinks we can go much higher than three percent".
The quarterly GDP growth rate was above 3% eight times during President Barack Obama's eight years in office. The home-improvement retailer said it expects a 3.5% rise in same-store sales this year.
Today's news on GDP is without question good news for the economy.
"Overall the USA economy and labor market remain in good shape, and will easily withstand any temporary drag from Harvey", Gus Faucher, chief economist at PNC Financial, wrote in a report on Wednesday.