The US economy accelerated to a 3.0% annualized pace in the April-to-June quarter, up from a 1.4% pace in the first quarter, as consumers and businesses stepped up spending, the Commerce Department said. The revision reflected stronger consumer outlays and a jump in equipment investment. Job gains this year and easing inflation readings also supported the picture, even though many Americans still say prices feel high.
The revised government figures show the US economy picked up speed in the second quarter. The Commerce Department upgraded its estimate to a 3.0% annualised gain for April through June. That followed a 1.4% pace in the first quarter of the year.
Consumer spending was at the heart of the revision. Spending, which makes up the largest share of US economic activity, was revised up in the quarter. That revision helped lift the headline GDP number.
Where the growth came from
Private investment also made a large contribution. Business investment rose, and equipment spending increased notably. Inventories, exports and government purchases were less important to the headline number.
One government gauge of the economy's underlying strength moved up too. A category that strips out volatile items like inventories, exports and government spending showed a faster pace than in the first quarter. That suggests the pickup had a broad base in spending and investment.
Inflation and the labour market
Inflation measures in the GDP report showed continued easing. The personal consumption expenditures gauge, the Federal Reserve's preferred inflation measure, rose but remained slightly above the Fed's 2% target.
Core PCE, which excludes food and energy, also eased but stayed above 2%.
Those readings were lower than the pace seen earlier in the year. They sit slightly above the Federal Reserve's 2% target, but they moved in the direction policy makers want. The Fed has raised its policy rate repeatedly over the previous period to fight inflation.
Labour-market data for the year add another concrete element to the assessment. Employers added jobs this year and unemployment remained low. Wages and hiring trends helped support consumer spending, even as prices for essentials stayed a sore point for many households.
Public mood and political context
The objective readings and public sentiment tell two different stories. By several standard measures, the economy has performed well. Employers added jobs, growth accelerated, and inflation eased. At the same time, surveys show many Americans feel the cost of living remains high.
That disconnect has political weight. Voter concerns about prices and daily expenses have influenced electoral politics this year. The economy's headline strength hasn't erased those worries.
How analysts read the data
Economists described the revisions as confirmation that the economy was resilient in mid-2024. Bill Adams, chief economist at Comerica Bank, said the new numbers show the US was in good shape in mid-2024. He pointed to stronger consumer spending and rising confidence as forces likely to support growth in the second half of the year.
Market participants and policy makers weigh those readings when setting expectations for interest rates. Easing inflation and solid growth can be read as evidence policy tightening worked. But they also make the case for patience before moving away from higher borrowing costs.
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Bill Adams, chief economist at Comerica Bank, said the revisions showed the US economy was in good shape in mid-2024.
This article was created with AI assistance.
