Consumer spending was revised up to a 3.4% annualized rate in the second quarter from 3.2%, while real final sales to private domestic purchasers rose 4.2%—the strongest in more than three years.
Those gains did not lift headline GDP because higher imports offset stronger household demand and business investment, leaving overall growth at 1.5%, down from 2.1% in the first quarter.
Nonresidential fixed investment increased at an 8.5% pace, while federal and state spending fell 1% as nondefense outlays declined.
Inflation was also revised higher, with the PCE price index at 5.3% and core PCE at 3.6%, complicating the picture for the Fed even as real gross domestic income rose 2.2%.