According to the data released by the US Department of Commerce, economic growth exceeded expectations and realized as 2.4 percent.
US economic growth unexpectedly picked up in the second quarter, supported by stronger-than-expected consumer spending and solid business investment.
Gross Domestic Product rose 2.4 percent year-on-year, following the 2% pace in the previous three months, according to preliminary assessments by the Ministry of Commerce on Thursday. The market expectation was for the growth to be 1.8 percent.
While consumer spending increased by 1.6 percent after the increase at the beginning of the year, this figure was expected to be 1.2 percent.
The Fed’s preferred core inflation metric, on the other hand, advanced at a slower pace than expected, at 3.8 percent.
The US economy is doing better than economists expected it to be a few months ago. While economists are split on the likelihood of a recession, the strong labor market, solid consumer spending and now falling inflation are bolstering hopes that the US will avoid an economic downturn.
Fed Chairman Jerome Powell said on Wednesday, after the Federal Reserve raised interest rates by a quarter point, that Fed officials no longer predicted a recession.
However, it is considered that adverse winds in the economy continue due to factors such as the Fed’s policy rate hike to the highest level in 22 years.
Still, headwinds remain, with the Fed’s benchmark interest rate at a 22-year high and some signs of consumer pressure raging.
The Personal Consumption Spending Price Index recorded its lowest growth since the closing months of 2020 with 2.6 percent on an annual basis in the April-June period. Excluding food and energy items, it was observed that the index recorded the slowest increase in two years. June data is expected to be released on Friday.