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US economy's growth on track to reach expected 2.1% rate

US Capitol in Washington, D.C.
US Capitol in Washington, D.C. Copyright DANIEL SLIM - AFP
Copyright DANIEL SLIM - AFP
By Euronews with Associated Press
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US GDP grew at a 2.1% rate between April and June, the US governement said on Thursday.

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The economic output in the second quarter slowed down from the first when the GDP expanded by 2.2% compared to the previous year.

Consumer spending, business investment, and state and local government outlays drove the second-quarter economic expansion.

The economy and job market have shown surprising resilience even though the Federal Reserve (the US equivalent of a federal central bank) has dramatically raised interest rates to combat inflation, which last year hit a four-decade high. 

The Fed has raised its benchmark rate 11 times since mid-March 2022, leading to concerns that ever-higher borrowing rates will trigger a recession.

Consumer spending rose at an annual rate of just 0.8% from April through June, down sharply from the government's previous estimate of 1.7% and the weakest figure since the first quarter of 2022.

Encouraging signs for the US economy

But business investment excluding housing, a closely watched barometer, rose at a 7.4% annual pace, the fastest rate in more than a year. State and local government spending and investment jumped 4.7%, the biggest such quarterly gain since 2019.

Growth is believed to be accelerating in the current July-September quarter, fuelled by consumption. Business investment is also thought to have remained solid.

Economists have estimated that the economy expanded at a roughly 3.2% annual rate in the third quarter, which would be the fastest quarterly growth in a year.

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