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US economy grows faster than expected in second quarter as inflation eases
The U.S. economy grew at a faster-than-expected pace in the second quarter.
The Bureau of Economic Analysis advance estimate of U.S. gross domestic product (GDP) in the second quarter) showed the economy grew at an annualized pace of 2.8% during the period, well above the 2% growth expected by economists surveyed by Bloomberg. The reading came in higher than first-quarter GDP, which was revised down to 1.4%.
“We thought [the second quarter] “The quarter will end up being the best for the economy this year,” Nationwide financial markets economist Oren Klachkin wrote about this morning’s Q2 GDP report. “We should see cooler GDP reports from here on out as consumers tighten their purse strings and businesses become more reticent to invest and hire.”
Meanwhile, the “core” Personal Consumption Expenditures index, which excludes volatile food and energy categories, rose 2.9% in the second quarter, above estimates of 2.7% but significantly below the 3.7% gain in the previous quarter.
The data release comes as investors try to gauge when the Federal Reserve will start cutting interest rates and whether the central bank can achieve a soft landing in which inflation falls to its 2% target without a significant economic slowdown.
On Thursday, markets priced in a 100% chance that the Fed would cut rates by the end of its September meeting.
“Today’s data will reinforce the notion that the Fed has the benefit of time,” Renaissance Macro’s head of economic research, Neil Dutta, wrote in a note after Thursday’s release. “In the Fed’s mind, there is no need to rush with private domestic demand growing at a solid pace in the second quarter. July remains a scheduled meeting for September.”
Football – FIFA World Cup Qatar 2022 – Group B – Iran v United States – Al Thumama Stadium, Doha, Qatar – November 29, 2022 Fans display a US flag in the stands ahead of the match REUTERS/Fabrizio Bensch (REUTERS / Reuters)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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