The U.S. economy displayed resilience in the face of higher borrowing costs, expanding at an annual rate of 2.1% from April to June, according to the government’s revised estimate released on Wednesday. This is a slight downgrade from the initial estimate of 2.4% growth for the last quarter. Despite the Federal Reserve’s efforts to control inflation with interest rate hikes, the economy has managed to continue expanding, with strong hiring and consumer spending. The report attributes growth to increased consumer spending, business investment, and government outlays. Additionally, the report shows a cooling of inflation, which could alleviate pressure on the Fed to further raise interest rates. Lower growth and weaker price increases are seen as positive news for the Federal Reserve. Consumer spending, accounting for 70% of the U.S. economy, rose at a pace of 1.7% in the second quarter, although down from 4.2% in the first quarter. Excluding housing, business investment increased at a strong rate of 6.1% during the last quarter. However, investment in housing declined due to higher mortgage rates. Despite the Fed’s aggressive efforts to combat inflation, the American economy has proven to be durable. Since June 2022, inflation has steadily decreased and in July it registered at 3.2%, an improvement still above the Fed’s 2% target. The personal consumption expenditures index in the GDP report rose at a pace of 2.5% in the second quarter, a decrease from the 4.1% pace in the first quarter. The employment market has remained healthy, as indicated by the consistent addition of jobs each month this year. Though there has been a slowdown in the past three months, with an average of 218,000 jobs added. The job market showed signs of weakening in a recent government report, with fewer job openings in July and decreased job quitting. However, job openings remain above pre-pandemic levels and the unemployment rate is still at a low level. There are hopes that the combination of falling inflation, steady economic growth, and steady hiring will lead to a rare “soft landing,” where the Fed successfully controls inflation without causing a recession. A final calculation of last quarter’s growth will be released next month.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
