US economy grew at a 2.8% pace in the second quarter, more than expected

of U.S. Economy It grew at a faster pace than expected in early 2024 as consumers continued to loosen their purse strings despite persistent inflation and high interest rates.

The Commerce Department said on Thursday that gross domestic product (GDP), the broadest measure of goods and services produced across the economy, grew at an annualized rate of 2.8 percent in the three months from April to June.

This is significantly higher than the 2% increase predicted by LSEG economists and the 1.4% increase in the first quarter.

“The U.S. economy is much stronger than people realize and markets have been concerned about slowing growth but should breathe a sigh of relief following this morning’s GDP numbers,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.

Consumer spending, which accounts for about two-thirds of GDP, grew at a solid clip in the second quarter, rising 2.3% in the second quarter after increasing 1.5% in the previous quarter, as Americans increased their spending on goods.

Business investment also grew at a rapid pace of 5.2 percent in the spring, despite companies facing headwinds such as high interest rates.

“GDP doubled from the first quarter as consumers spent more than expected and businesses built inventories in anticipation of continued strong consumer demand,” said Robert Frick, corporate economist at Navy Federal Credit Union. “This is a pleasant surprise that further supports the continued expansion, but not so pleasant that it should make the Fed hesitate to cut rates.”

Despite last quarter’s gains, the economy still appears to be slowing, even as it faces the highest borrowing costs in more than two decades. Federal Reserve Aggressively raise interest rates in 2022 and 2023 to curb inflation, Economic growth was much higher More than now.

There are other signs that tighter monetary policy is slowing growth: Job growth is slowing, the housing market, which is vulnerable to rising interest rates, is in a prolonged slump and consumer spending is showing signs of leveling off.

Many consumers continue to feel the pain of rising prices for basic necessities like rent, groceries and car insurance, and are unhappy with their financial situation.

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