The American economy expanded at an annualized rate of 2.4% in the second quarter of 2023, according to the advance estimates released Thursday by the U.S. Bureau of Economic Analysis.
The figure marked sequential growth from the previous quarter’s GDP reading of 2% and sharply outpaced economist expectations of 1.8%, signaling that the pace of economic growth gained further strength.
Fed Chair Jerome Powell warned during the FOMC press conference on Wednesday that the economy might undergo a period of below-trend growth along with an easing in labor market conditions, but it’s worth noting the Fed’s staff no longer forecasts a recession.
Investors revised the probability of a rate hike in September slightly higher (from 20% to 22%) and assigned a 36% probability of a rate hike by November, up from 30% prior to the GDP reading.
Key Drivers Of Q2 GDP Growth:
- In comparison to the first quarter, the acceleration in second-quarter GDP was primarily driven by an increase in private inventory investment (advancing at a 4.9% annualized pace in the second quarter from a negative 0.4% in the first) and a rise in nonresidential fixed investment (up from 0.6% Q1 to 7.7% in Q2).
- This gain, however, was countered in part by a drop in exports (down from 7.8% Q1 to a negative 10.8% in Q2) and slower growth in consumer spending (down from 4.2% to 1.6% in Q2), federal government spending (down from 6% to 0.9% in Q2), and state and local government spending (down from 4.4% to 3.6% in Q2).
- Imports fell last quarter (from 2% to a negative 7.8%), which contributed positively to the GDP.
- The GDP price index grew at 2.2% annualized rate in Q2, down from 4.1% in Q1 and below estimates of 1.8%, indicating a softening in the price pressures.
More Economic Data Released Thursday Morning
In addition to the GDP data, the U.S. Census Bureau reported a solid 4.7% monthly increase in durable goods orders for June, marking a substantial increase from the 1.8% growth recorded in May and beating the estimated 1% increase.
At the same time, the Department of Labor published its weekly unemployment claims report, revealing the number of Americans filing for jobless claims fell by 7,000 to reach 221,000 for the week ending July 22nd, declining more than the expected 235,000.
Produced in association with Benzinga