According to the data released by the US Department of Commerce, economic growth exceeded expectations and realized as 2.4 percent. Orders for durable goods in the country increased by 4.7 percent compared to the previous month to $ 302.5 billion in June, while the goods trade deficit narrowed by 4.4 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.
Durable goods orders rose.
Orders for durable goods in the US increased by 4.7 percent compared to the previous month in June, reaching $ 302.5 billion.Orders were expected to increase by 1% during this period.
Orders for durable goods rose 2 percent to $288.9 billion in May.
Orders for transportation equipment rose 12.1% to $115.3 billion in June for the fourth month in a row. Orders excluding transportation increased by 0.6 percent in the same period, while orders excluding defense increased by 6.2 percent.
Orders for durable consumer goods, which consist of products with a life span of at least 3 years, are important in terms of providing information on industrial production.
The goods trade deficit fell 4.4 percent
On the other hand, the goods trade deficit in the USA decreased by 4.4 percent on a monthly basis in June and regressed to 87.8 billion dollars.Market expectations were for the goods trade deficit to be $91.8 billion during this period. The goods trade deficit was recorded as $91.9 billion in May.
In the said period, goods exports increased by 400 million dollars to 162.5 billion dollars, while goods imports decreased by 3.6 billion dollars to 250.3 billion dollars. In addition, wholesale stocks decreased by 0.3 percent month-on-month in June, while retail stocks increased by 0.7 percent.