The U.S. economy is growing at a 4.5 percent annualized rate in the second quarter following strong retail-sales data, the Atlanta Federal Reserve’s GDPNow forecast model showed on Monday.

The latest estimate on gross domestic product growth was faster than the 3.9 percent pace estimated on Wednesday, the Atlanta Fed said.

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2018 is 4.5 percent on July 16, up from 3.9 percent on July 11. The nowcast of second-quarter real consumer spending growth increased from 2.7 percent to 3.1 percent after Monday morning's retail sales report from the U.S. Census Bureau.

The nowcast of second-quarter real federal government spending growth increased from 1.4 percent to 5.6 percent after the Monthly Treasury Statement release on Thursday, July 12, from the U.S. Department of the Treasury's Bureau of the Fiscal Service.

The next Atlanta GDPNow update is Wednesday..

By comparision, the New York Fed forecasts have been running much lower than Atlanta.

The New York Fed Staff Nowcast stands at 2.8% for the second quarter and 2.6% for the third quarter. That would follow just 2 percent growth in the first three months of the year.

Meanwhile, the government said Monday that U.S. retail sales rose at a solid pace last month despite higher prices and modest wage gains, a sign of underlying consumer optimism, the Associated Press reported.

The Commerce Department said Monday that sales at retailers and restaurants increased 0.5 percent in June, following a big 1.3 percent gain the previous month. May’s figure was revised sharply higher from an initial estimate of 0.8 percent.

Americans are confident about the economic outlook, with the unemployment rate near an 18 year-low and the economy accelerating after a sluggish start to the year. Retail sales rose 6.6 percent from a year earlier, the fastest annual pace in five years.

Still, some of the spending increases, such as gas station sales, simply reflect higher prices. Excluding auto dealers and gas stations, sales rose 0.3 percent in June.

Home and garden stores reported a strong 0.8 percent sales gain, which was likely lifted in part by more expensive lumber. The Trump administration imposed tariffs on some lumber imports from Canada last fall.

With consumer spending strong, most economists believe that growth will jump to a 4 percent to 4.5 percent annual rate in the April-June quarter, which would be the strongest in four years.

(Newsmax wire services contributed to this report).

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