The U.S. economy grew 2.8% in the second quarter, much faster than expected. The growth was boosted by consumer spending and private investment in inventories and nonresidential fixed investment.
The Commerce Department’s initial estimate showed that U.S. economic activity grew strongly in the second quarter. That beat expectations.
Real gross domestic product increased at an annualized rate of 2.8%. That’s a measure of all goods and services produced between April and June.
Economists surveyed by Dow Jones said that after a 1.4% increase in the first quarter, they had expected a 2.1% gain.
The growth was boosted by consumer spending and private investment in inventories and nonresidential fixed investment.
Personal consumption expenditures rose 2.3% in the quarter from the first quarter. The main spending that had a big impact was on services and goods.
On the other hand, imports jumped 6.9%, the biggest quarterly gain since 2022.
Stock market futures growth , but Treasury yields fell
Some good news on the inflation front: the personal consumption expenditures price index, a key measure for the Federal Reserve, rose 2.6% in the quarter. Recall that it had previously fallen 3.4% in the first quarter. Excluding food and energy, core PCE prices, which the Fed looks at as a long-term indicator of inflation, rose 2.9%, down from 3.7% in the previous period.
It is worth noting, however, that the personal savings rate continues to decline. It is 3.5% in the second quarter, compared with 3.8% in the first quarter.
All has not been smooth sailing in the consumer market lately.
Credit card balances have reached their highest level since 2012, the Philadelphia Federal Reserve said. Loan arrears have also reached a new high. It hasn’t helped that banks have tightened credit standards. They’ve also reduced the number of new cards they issue.
Retail sales figures continue to rise.
This shows that consumers are comfortable with high interest rates and persistent inflation. The real estate sector is also under pressure. Sales are falling, while home prices continue to rise. Naturally, buyers are reluctant to buy real estate.
Federal Reserve officials are expected to keep interest rates on hold. Although market prices suggest that rates will be cut as early as September. Central bankers have said that further increases are unlikely.
Source: https://www.nbcnews.com/business/economy/us-economy-gdp-q2-2024-faster-than-expected-rcna163606