US growth upgraded, giving Fed room to move on rates

The US economy grew faster than initially thought in the second quarter on solid domestic demand, showing fairly strong momentum that could still allow the Federal Reserve to hike interest rates this year.

GDP expanded at a 3.7% annual pace instead of the 2.3% rate reported last month, the Commerce Department said yesterday in its second GDP estimate for the April-June period.

The GDP report, which was released in the wake of a global stock market selloff, should assure investors and cautious Fed officials that the US is in good shape to weather the growing strains in the world economy.