US Economy Grows 3% In Q2, Jobless Claims Show Minimal Change
The US economy grew faster in the second quarter than earlier figures suggested, as revised consumer spending data outweighed declines in other areas. Gross domestic product increased at an annualised rate of 3% between April and June, up from the previously reported 2.8%, according to the Bureau of Economic Analysis.
Personal spending, a key economic driver, rose by 2.9%, revised from an earlier estimate of 2.3%.
The stronger spending data came from higher consumption of goods and services, particularly in health care, housing, utilities, and recreation. At the same time, estimates for business investment, inventories, net exports, residential investment, and government spending were reduced.
In a separate release, initial claims for unemployment benefits showed little change, remaining at 231,000. In response, Treasury yields increased, S&P 500 futures stayed elevated, and the dollar appreciated.
Gross domestic income, which tracks income earned from production, grew by 1.3%, matching the previous quarter's performance. While GDP measures overall spending on goods and services, GDI reflects the income generated and costs incurred in producing those goods and services. When averaged, the two indicators pointed to 2.1% growth.
Economic expansion has slowed this year after strong growth in late 2023. Analysts predict a further slowdown through the remainder of 2024 due to high borrowing costs weighing on the economy. However, the Federal Reserve is anticipated to begin cutting interest rates next month as inflation eases, potentially providing relief to sectors like housing and manufacturing.
In a related development, new data showed a slight decline in unemployment claims. Initial applications for state benefits fell by 2,000 to a seasonally adjusted 231,000 for the week ending Aug. 24, according to the Labor Department, which was close to the predicted 232,000.
The Bureau of Labor Statistics also recently adjusted its employment figures, reducing monthly job growth by 68,000 for the year ending in March. However, many economists considered the revision insignificant.
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