The U.S. economy showed few signs of recession in the second quarter, as gross domestic product grew at a faster-than-expected pace during the period, the Commerce Department reported Thursday.
GDP, the sum of all goods and services activity, increased at a 2.4% annualized rate for the April-through-June period, better than the 2% consensus estimate from Dow Jones. GDP rose at a 2% pace in the first quarter.
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Markets moved higher after the report, with stocks poised for a positive open and Treasury yields on the rise.
Consumer spending powered the solid quarter, aided by increases in nonresidential fixed investment, government spending and inventory growth.
Perhaps as important, inflation was held in check through the period. The personal consumption expenditures price index increased 2.6%, down from a 4.1% rise in the first quarter and well below the Dow Jones estimate for a gain of 3.2%.
Consumer spending, as gauged by the department’s personal consumption expenditures index, increased 1.6% and accounted for 68% of all economic activity during the quarter. That did market a pullback from the 4.2% increase in the first quarter but still showed resiliency amid higher interest rates and persistent inflation.
In the face of persistent calls for a recession, the economy showed surprising resilience despite a series of Federal Reserve interest rate increases that most Wall Street economists and even those at the central bank expect to cause a contraction.
“It’s great to have another quarter of positive GDP growth in tandem with a consistently slowing inflation rate,” said Steve Rick, chief economist at TruStage. “After yesterday’s resumption of interest rate hikes, it’s encouraging to see the aggressive hike cycle working as inflation continues to decline. Consumers are getting a reprieve from the rising costs of core goods, and the U.S. economy is off to a stronger start to the first half of the year.”
Growth hasn’t posted a negative reading since the…
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