US economy grew 2.8% in Q2, exceeding expectations

The US economy demonstrated a notable recovery in the second quarter of 2024, with a GDP growth rate of 2.8%, according to the Commerce Department. This growth surpassed expectations, which had been set at 1.9%, and marked a significant increase from the 1.4% annual growth rate recorded in the first quarter of the year. The acceleration in economic activity was driven by increased consumer spending, private inventory investments, and nonresidential fixed investment.

Despite the robust growth, the US economy has been facing challenges from the highest borrowing rates in decades, following the Federal Reserve's aggressive series of rate hikes. The Fed raised its benchmark rate 11 times between 2022 and 2023, bringing it to a 23-year peak of approximately 5.3%. This monetary tightening was a response to an inflation surge as the economy recovered from the COVID-19 recession. The economic slowdown earlier in the year was attributed to a surge in imports and a decline in business inventories, along with a moderation in consumer spending. However, the recent GDP growth suggests that the economy has regained some momentum.