The U.S. economy grew at an annualized rate of 2.8% in the second quarter of 2024, according to new data released Thursday by the Commerce Department.
Economists had expected gross domestic product (GDP) to grow 1.9% in the three months from April to June, close to the 1.4% growth in the first quarter of this year.
The strong report came as the Federal Reserve is scheduled to meet next week to consider changes to interest rates, which have remained unchanged since July of last year.
With inflation stubbornly staying above the Fed’s 2% target, the central bank is keeping interest rates at their highest in 20 years.
Inflation has improved significantly since hitting a 40-year high of 9.1% in June 2022. But hopes of a rate cut have been delayed after several better-than-expected first-quarter inflation numbers.
Recent inflation readings have revived hopes that a rate cut is on the way. Consumer prices fell for the first time since the pandemic in June, dropping 0.1%. The Consumer Price Index (CPI) rose 3% year-on-year, down from 3.3% in May.
The labor market, which has been surprisingly strong over the past two years, is also showing signs of cooling, increasing the likelihood of interest rate cuts.
The June employment report showed a rise of 206,000 jobs last month, but the Labor Department significantly revised down job gains for April and May, resulting in 110,000 fewer jobs than initially reported. The unemployment rate also rose to 4.1% in June.
Updated at 9:25 a.m. ET.
