GDP grew at a 1.7% annualized rate, which was much stronger than the 1.0% expected by economists.
This was largely driven by personal consumption, which climbed by 1.8%. Economists were only expecting a 1.6% gain.
"Second quarter growth was supported by a 1.8% gain in consumption, down only slightly from a 2.3% gain in the first quarter," said Capital Economics Paul Ashworth."Together, those increases suggest that households have coped well with higher taxes."
Indeed, many feared that higher payroll taxes, which came with last year's fiscal cliff dealing, would crush the consumer.
That just hasn't been the case.