The U.S. economy grew at a 2.2% inflation-adjusted annualized pace in the second quarter, up from the Commerce Department’s earlier estimate of 1.5%, as consumer spending and business investment strengthened. That pace still fell below the 2.5% recorded in the first quarter.
Spending and Investment
Consumer spending rose 0.9% in the second quarter, its fastest pace in nearly two years. The Commerce Department had earlier put consumer spending growth at 0.1%. Consumer spending accounts for two-thirds of gross domestic product, according to the report.
Business investment also surged, with AI-related spending helping drive the increase. The article gives no separate figure for business investment or AI-related spending.
Economists had expected the earlier estimate of 1.5% growth to hold, according to FactSet consensus estimates. The updated figure therefore showed stronger growth than economists had anticipated, though it remained below the first-quarter rate.
Interest Rates and the Report’s Limits
“Today’s US GDP data shows that consumers and businesses kept spending and investing through the second quarter, despite higher inflation and interest rate uncertainty,” Atsi Sheth, Moody’s Ratings chief credit officer, said in a statement on Wednesday.
The Federal Reserve raised interest rates. Higher rates make borrowing more expensive for businesses and consumers, the report says, and can slow investment and spending.
The supplied article reports economic growth, consumer spending, business investment, inflation and interest-rate uncertainty. It doesn't report demographic effects, a transfer of national sovereignty, migration policy or popular resistance. It also identifies no global institution or political group as the driver of the economic figures. Those claims can't be established from the information provided.
The story was developing and subject to updates.