The U.S. economy showed robust growth in the last quarter, expanding at a healthy 3% annual pace, according to the latest report from the Commerce Department. This marks an upgrade from the initial estimate of 2.8% growth from April through June. The acceleration in growth is a positive sign following a slower 1.4% growth rate in the first quarter of 2024.
Consumer spending, a key driver of economic activity, increased at a 2.9% annual rate in the last quarter, up from the initial estimate of 2.3%. Business investment also saw significant growth, expanding at a rate of 7.5%, with a notable 10.8% increase in equipment investment.
The report indicates that the economy remains resilient despite facing pressure from high interest rates. The Federal Reserve's efforts to combat inflation by raising interest rates have helped stabilize prices, with inflation dropping from a peak of 9.1% to 2.9% as of last month.
With inflation under control, the Fed is now considering cutting its benchmark interest rate at its upcoming meeting in mid-September. This move is aimed at achieving a 'soft landing,' maintaining a healthy job market, and avoiding a recession. Lower interest rates could lead to reduced borrowing costs for consumers and businesses, stimulating further economic activity.
While the job market has shown signs of weakening, with the unemployment rate rising to 4.3%, it remains relatively low compared to historical levels. Job openings and hiring pace have also declined, though they are still at solid levels.
The Commerce Department's second estimate of GDP growth for the April-June quarter provides valuable insights into the state of the economy. The final estimate, expected next month, will offer further clarity on the trajectory of economic growth in the United States.
