The U.S. economy grew at a robust 3 percent annual rate in the last quarter, according to a revised government report released on Thursday. The acceleration in growth from a modest 1.4 percent in the first quarter of 2024 highlights a significant rebound.
The numbers show that consumer spending, which represents about 70 percent of the U.S. economy, increased at a 2.9 percent annual rate. Additionally, business investment rose sharply by 7.5 percent, driven by a notable 10.8 percent increase in spending on equipment.
The report underscores an economy that remains resilient. Consumer confidence has recently improved, as indicated by surveys from the Conference Board and the University of Michigan.
According to Bill Adams, chief economist at Comerica Bank, the U.S. economy was in strong shape in mid-2024. “Solid consumer spending drove growth in the second quarter, and the rise in consumer confidence in July suggests continued momentum into the latter half of the year,” said Adams.
The updated GDP estimate for April to June also reflects easing inflation. Additionally, a key GDP measure of the economy’s underlying strength, which excludes volatile items like exports and government spending, increased at a healthy 2.9 percent annual rate.
The economy has continued to grow and employment has remained strong. With inflation now close to the Fed’s target and likely to decrease further, Chair Jerome Powell has suggested that the Fed is ready to start lowering its benchmark interest rate in its upcoming mid-September meeting. This could lead to lower borrowing costs for consumers.
Thursday’s report is the Commerce Department’s second estimate for GDP growth in the April-June quarter, with the final estimate due late next month.
