The U.S. economy grew at a faster pace than expected at the beginning of 2024 as consumers continued to open their wallets despite ongoing inflation and high interest rates.
Gross domestic product, the broadest measure of goods and services produced across the economy, grew by 2.8% on an annualized basis in the three-month period from April through June, the Commerce Department said in its first reading of the data on Thursday.
That is much higher than the 2% increase forecast by LSEG economists and the 1.4% pace seen during the first quarter.
“The U.S. economy is much stronger than people realize and to the extent that markets were worried about a growth slowdown, they should breathe a sigh of relief after this morning’s GDP number,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
Consumer spending, which accounts for about two-thirds of GDP, saw a solid increase during the second quarter. It rose 2.3% for the period, up from the 1.5% figure recorded the previous quarter, as Americans boosted their spending on goods.
Business investment also rose at a brisk 5.2% pace in the spring, even as companies dealt with headwinds like high interest rates.
“GDP doubled from the first quarter as consumers spent more than expected and businesses built up inventories expecting continued good consumer demand,” said Robert Frick, corporate economist with Navy Federal Credit Union. “This was a nice surprise in further support of the expansion continuing, but not so nice as to make the Fed hesitate in cutting interest rates.”
This is a developing story. Please check back for updates.
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