The U.S. economy grew last quarter at a healthy 3% annual pace, fueled by strong consumer spending and business investment, the government said today in an upgrade of its initial assessment, according to the Associated Press.
The Commerce Department had previously estimated that the nation’s gross domestic product — the total output of goods and services — expanded at a 2.8% rate from April–June. The second-quarter growth marked a sharp acceleration from a sluggish 1.4% growth rate in the first three months of 2024.
Consumer spending, which accounts for about 70% of U.S. economic activity, rose at a 2.9% annual rate last quarter, up from 2.3% in the government’s initial estimate. Business investment expanded at a 7.5% rate, led by a 10.8% jump in investment in equipment.
Today’s report reflected an economy that remains resilient despite the pressure of continued high interest rates.
The latest GDP estimate for the April–June quarter also included figures that showed that inflation continues to ease while remaining just above the Federal Reserve’s 2% target. The central bank’s favored inflation gauge — the personal consumption expenditures index (PCE) — rose at a 2.5% annual rate last quarter, down from 3.4% in the first quarter of the year. Excluding volatile food and energy prices, so-called “core” PCE inflation grew at a 2.7% pace, down from 3.2% from January through March.
Both the PCE inflation numbers issued today marked a slight improvement on the government’s first estimate.
A GDP category that measures the economy’s underlying strength rose at a healthy 2.9% annual rate, up from 2.6% in the first quarter. This category includes consumer spending and private investment but excludes volatile items such as exports, inventories and government spending.
Today’s report was the Commerce Department’s second estimate of GDP growth in the April–June quarter. It will issue its final estimate late next month.
