The U.S. economy accelerated unexpectedly to a 2.4% annual growth rate from April through June, showing continued resilience in the face of steadily higher interest rates resulting from the Federal Reserve's 16-month-long fight against inflation.
Thursday's estimate from the Commerce Department indicated that the gross domestic product — the economy's total output of goods and services — picked up from the 2% growth rate in the January-March quarter.
Consumer spending slowed to a 1.6% annual rate, from 4.2% in the first quarter of the year, a likely consequence of higher borrowing costs. But business investment and state and local government spending grew faster.
Kubota tractors are stored in Uniontown, Pa., Friday, June 9, 2023.
Gene J. Puskar, Associated Press
In fighting inflation, which last year hit a four-decade high, the Fed has raised its benchmark rate 11 times since March 2022, most recently on Wednesday. The resulting higher costs for a broad range of loans — from mortgages and credit cards to auto loans and business borrowing — have taken a toll on growth.
Still, they have yet to tip the United States into a widely forecast recession. Optimism has been growing that a recession isn't coming after all, that the Fed can engineer a so-called "soft-landing" — slowing the economy enough to bring inflation down to its 2% annual target without wrecking an expansion of surprising durability.
This week, the International Monetary Fund upgraded its forecast for U.S. economic growth for all of 2023 to 1.8%. Though that would be down from 2.1% growth for 2022, it marked an increase from the 1.6% growth that the IMF had predicted for 2023 back in April.
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Thursday's estimate from the Commerce Department indicated that the gross domestic product — the economy's total output of goods and services — picked up from the 2% growth rate in the January-March quarter.
Consumer spending slowed to a 1.6% annual rate, from 4.2% in the first quarter of the year, a likely consequence of higher borrowing costs. But business investment and state and local government spending grew faster.
Kubota tractors are stored in Uniontown, Pa., Friday, June 9, 2023.
Gene J. Puskar, Associated Press
In fighting inflation, which last year hit a four-decade high, the Fed has raised its benchmark rate 11 times since March 2022, most recently on Wednesday. The resulting higher costs for a broad range of loans — from mortgages and credit cards to auto loans and business borrowing — have taken a toll on growth.
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Still, they have yet to tip the United States into a widely forecast recession. Optimism has been growing that a recession isn't coming after all, that the Fed can engineer a so-called "soft-landing" — slowing the economy enough to bring inflation down to its 2% annual target without wrecking an expansion of surprising durability.
This week, the International Monetary Fund upgraded its forecast for U.S. economic growth for all of 2023 to 1.8%. Though that would be down from 2.1% growth for 2022, it marked an increase from the 1.6% growth that the IMF had predicted for 2023 back in April.
US economy grew at a faster 2.4% rate in April-June quarter despite Fed rate hikes
The U.S. economy accelerated unexpectedly to a 2.4% annual growth rate from April through June, showing continued resilience in the face of steadily higher interest rates.
