The second round of estimates for US GDP during the April-June quarter showed growth at an annual rate of 3.3 per cent over the previous quarter, a respectable number for that gigantic economy in the best of circumstances, but a remarkable achievement when there is supposed to be a slowdown, if not a recession. Growth during the previous quarter was estimated to be 0.9 per cent.

The first round estimates, which were put out last month, showed a growth rate of 1.9 per cent, which wasn't bad either considering the circumstances, but the significant upward revision on the basis of expanded data coverage raises questions about how effectively analysts are reading the signs.

It is not as though the broad patterns do not conform to expectations. The most negative factor, residential construction, remains in the doldrums. It declined by over 15 per cent during the quarter, although this represents a significant improvement over the previous quarter's decline of over 25 per cent. The main contributors to the surprisingly buoyant performance were consumption spending, which grew by 1.7 per cent during the quarter, up from 0.9 per cent in the previous one and, most importantly, exports, which increased by 13.2 per cent during the quarter, almost twice the rate during the previous one.

It is all the more remarkable that this acceleration took place in a period when the dollar was mostly appreciating against other currencies. The fact that imports declined by over 7 per cent meant that the external sector contributed hugely to the acceleration in the growth rate. As far as investment activity is concerned, components other than residential construction were in positive growth territory, with non-residential structures increasing by over 13 per cent during the quarter.

Looking ahead, few expect this kind of momentum to persist, even after taking into account the impact of the tax rebates and transfers under the fiscal stimulus package on third-quarter consumer spending. Expectations that growth will turn negative in the fourth quarter as well as into next year still dominate. The full impact of asset price deflation on a variety of macro-economic indicators is yet to be felt. However, the fact that the economy did not conform to expectations during the first two quarters raises the possibility that it will continue to confound forecasters in the months ahead. Under the circumstances, the US economy is demonstrating an even greater resilience than the buoyant emerging economies.

There are two consequences of this quarter's performance that will have important implications for the global economy in the coming quarters. First, if the US economy, particularly consumer spending, is not slowing down as much as was initially thought, oil consumption will remain relatively buoyant. Demand pressures may quickly reverse the favourable tendencies that international prices have shown to importing countries in recent weeks. Second, from a policy perspective, these numbers could lead to an upturn in US interest rates earlier than was originally expected. Flows into emerging markets may be adversely affected, reinforcing pressures on asset prices that have been felt during the past few months.