The American economy showed strong growth in the second quarter, expanding at a 3% annual pace fueled by consumer spending and business investment. The Commerce Department’s report confirmed the previous estimate, highlighting a significant increase from the first quarter’s 1.6% rate.
Consumer spending grew at a 2.8% pace, slightly lower than the initial estimate of 2.9%, while business investment surged at an 8.3% annual rate, driven by a 9.8% rise in equipment investment. Despite 11 interest rate hikes in 2022 and 2023 to combat inflation, the economy remained resilient, with inflation now at 2.5%.
Although job growth has slowed in recent months, other economic indicators remain positive, such as increased retail spending, industrial production, and rising consumer sentiment. However, concerns over high prices for essentials persist, with political figures like Trump and Harris trading blame.
The Fed’s recent interest rate cut reflects a shift towards supporting job growth. Looking ahead, the economy is projected to have expanded at a 2.9% pace in the July-September quarter, setting the stage for further updates from the Commerce Department on Oct. 30.
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