US Q2 GDP Growth Revised Up to Robust 3%
The US economy grew at an annual rate of 3% in the second quarter of 2024, according to the Commerce Department's revised estimate, up from an initial estimate of 2.8%. This growth represents a significant acceleration from the 1.4% rate observed in the first quarter of the year. Key contributors to this growth include consumer spending, which accounts for approximately 70% of U.S. economic activity and rose at an annual rate of 2.9%, up from the previously estimated 2.3%. Business investment also showed robust growth, expanding at an 8.5% rate, with a notable 10.8% increase in equipment investment.
The Federal Reserve is anticipated to reduce its benchmark interest rate at its upcoming mid-September meeting. This decision follows a series of rate hikes over 2022 and 2023, which aimed to curb inflation but have since kept inflation rates slightly above the Fed's 2% target. Lower benchmark rates are expected to lead to decreased rates for consumer borrowing, including auto loans and mortgages. The revised GDP figures and anticipated interest rate cuts come amidst concerns about a weakening labor market, with the economy adding 114,000 jobs in July and the unemployment rate rising to 4.3%.
