After hiking its benchmark lending rate by a quarter point this week, the Fed will likely view the GDP report in a positive light.īut the report also underpins resilience in the economy, which could give the Fed enough leeway to roll out yet another hike this year. The slowdown in consumer spending reflects cooling demand, which the Federal Reserve has been trying to achieve through a series of aggressive rate increases. That uptick was mostly thanks to spending on equipment, which jumped to 10.8% from -8.9%. Nonresidential business investment rose sharply to a 7.7% growth rate in the second quarter, up from a 0.6% rate in the beginning of the year. That was driven by a sharp pullback in spending on durable goods, which are products such as cars and washing machines meant to last at least three years. GDP is also adjusted for inflation.Įconomic growth in the second quarter was driven by business investment, government purchases, inventory investment and consumer spending, though at a much weaker pace than in the first quarter.Ĭonsumer spending, which accounts for about two-thirds of economic output, grew at just a 1.6% rate in the second quarter, down sharply from a 4.2% rate in the first three months of the year.
That was a faster pace than in the first three months of the year and was also above economists’ expectations for a 1.8% rate, according to Refinitiv. Gross domestic product, the broadest measure of economic output, grew by an annualized, seasonally adjusted 2.4% rate in the April-through-June period. The US economy picked up steam in the second quarter despite punishing rate hikes and still-high inflation, the Commerce Department reported Thursday.
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