Downgrading its initial estimate, the government reported today that the U.S. economy expanded at a 2.1% annual pace from April through June, showing continued resilience in the face of higher borrowing costs for consumers and businesses, according to the Associated Press. The government had previously estimated that the economy expanded at a 2.4% annual rate last quarter.
The Commerce Department’s second estimate of growth last quarter marked a slight acceleration from a 2% annual growth rate from January through March. Though the economy has been slowed by the Federal Reserve’s strenuous drive to tame inflation with interest rate hikes, it has managed to keep expanding, with employers still hiring and consumers still spending.
Today’s report on the nation’s gross domestic product — the total output of goods and services — showed that growth last quarter was driven by upticks in consumer spending, business investment, and outlays by state and local governments. A measure of consumer prices in the report also showed inflation cooling, which could ease the pressure on the Fed to further raise interest rates.
Consumer spending, which accounts for about 70% of the U.S. economy, rose at a 1.7% annual pace in the April–June quarter — a decent gain, though down from 4.2% in the first three months of 2023. Excluding housing, business investment rose at a strong 6.1% annual rate last quarter. Investment in housing, hurt by higher mortgage rates, fell in the second quarter.
Today’s government report, the second of three estimates of last quarter’s growth, will be followed by a final calculation late next month.
