By Greg Robb, MarketWatch WASHINGTON (MarketWatch) — The U.S. economy expanded at a slightly faster pace than previously thought in the second quarter of 2011, led by a pickup in consumer and construction spending, government data showed Thursday. Gross domestic product rose at an annual rate of 1.3% in the second quarter, the Commerce Department said. The rate of GDP growth was faster than the government’s prior reading of 1.0%. This is the third and final revision in the government’s estimate of second-quarter growth in goods and services. The government provides three estimates of economic growth each reflecting more complete information than the previous one. The revision was slightly higher than expectations of economists surveyed by MarketWatch, who figured GDP would be revised up to 1.2% growth. See comprehensive MarketWatch calendar. Investors greeted data on unemployment claims as well as the GDP revision, bidding the Dow Jones Industrial Average DJIA +2.23% sharply higher at the open on Wall Street. Read more on fewer first-time filings for unemployment insurance last week. Compared with the previous estimate, the government estimated much more spending on structures took place between April and June as well as slightly more spending by consumers — a potential bright spot on the economic landscape. Despite the upward revision, the general picture remains that of a very soft economy vulnerable to shocks such as the European debt crisis. Indeed, with the economy growing only at a 0.4% pace in the first three months of the year, the growth rate for the first half of the year amounted to a dismal 0.9% rate. The Federal Reserve said last week that there are “significant downside risks” to the U.S. economic outlook, including strains in global financial markets. Did Fed language spook markets? Economists are forecasting a 2.0% growth rate for the current quarter, which ends Friday, and a 2.1% rate in the fourth quarter. This consensus forecast belies the fact that many analysts are concerned the economy could be losing steam. Economists continue to debate whether the economy might slip into a double-dip recession. Even if an outright recession is avoided, the pace of growth isn’t expected to be fast enough to make a serious dent in the nation’s persistently high unemployment rate. Late Wednesday, Fed chief Ben Bernanke called the weak labor market “a national crisis.” The central bank last week launched a new plan to effectively twist the yield curve, by selling down its holdings of short-term government securities and replacing them with longer-term debt. Read more about Bernanke’s latest comments.

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