The U.S. economy experienced robust growth of 3 percent on an annual basis in the second quarter of 2024, driven by strong consumer spending and business investment, as reported by the Associated Press in an updated evaluation.
Previously, the U.S. Commerce Department had projected that the nation’s gross domestic product (GDP)—which reflects the total output of goods and services—grew at a rate of 2.8 percent from April to June.
Recovery from slow growth
This growth in the second quarter represents a significant rebound from a sluggish 1.4 percent increase in the first quarter of 2024.
Consumer spending, which constitutes approximately 70 percent of U.S. economic activity, increased at an annual rate of 2.9 percent last quarter, an improvement from the earlier estimate of 2.3 percent. Business investment surged at a rate of 7.5 percent, fueled by a notable 10.8 percent rise in equipment investment.
Economic resilience amid high interest rates
The recent report underscores an economy that remains strong despite the ongoing challenge of high interest rates.
The revised GDP figures for the April-June period also indicated that inflation is gradually easing, though it continues to hover just above the Federal Reserve’s target of 2 percent. The personal consumption expenditures index (PCE), the central bank’s preferred measure of inflation, rose at an annual rate of 2.5 percent last quarter, down from 3.4 percent in the first quarter. Core PCE inflation, which excludes volatile food and energy prices, grew at a rate of 2.7 percent, a decrease from 3.2 percent in the January-March period.
Read more: U.S. inflation slows to 2.9 percent, lowest in over 3 years
Improvements in PCE metrics
Both PCE inflation metrics released on Thursday showed slight improvements over the government’s initial estimates.
Additionally, a GDP category that gauges the economy’s fundamental strength increased at a solid annual rate of 2.9 percent, up from 2.6 percent in the first quarter. This category encompasses consumer spending and private investment while excluding more variable components such as exports, inventories, and government expenditures.
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