The American economy sustained a robust growth rate of 3% annually from April to June, driven by sturdy consumer spending and business investments, according to a report released by the Commerce Department. This latest update maintains the previously estimated figures for the second quarter. The nation’s gross domestic product, which measures the total output of goods and services, showed a significant acceleration compared to the meager 1.6% growth rate in the first quarter of the year.
Consumer spending, a crucial factor in the economy’s performance, expanded by 2.8% in the last quarter, slightly lower than the initial estimate of 2.9%. Business investments demonstrated strength, growing at an impressive pace of 8.3% annually during the same period, largely propelled by a notable 9.8% surge in equipment investments.
Despite undergoing 11 interest rate hikes by the Federal Reserve in 2022 and 2023 to combat soaring inflation rates, the largest economy in the world displayed exceptional resilience. Inflation, as measured by the consumer price index, peaked at 9.1% in mid-2022 but has since declined to 2.5%, only marginally above the Federal Reserve’s target of 2%.
Amidst rising borrowing costs, the American economy continued its expansion, with businesses continuing to recruit new employees. However, recent data suggests some softness in the job market. Between June and August, the average monthly job growth rate stood at 116,000, marking the lowest three-month average since mid-2020 during the height of the COVID-19 pandemic’s impact on the economy. The unemployment rate, which was at a historic low of 3.4% last year, has increased to 4.2%, although it remains relatively low compared to historical norms.