The U.S. economy grew faster than previously reported in Q2 2024 as consumers spent more than expected on goods and services in the three months ended June 30. According to the Bureau of Economic Analysis' second estimate of U.S. gross domestic product for the second quarter of 2024, the economy grew at an annualized rate of 3.0 percent during the period, an upward revision from the previous estimate of 2.8 percent and a sharp acceleration from 1.4 percent in Q1 2024.
According to the BEA, the upward revision to personal consumption expenditure, which accounts for roughly two thirds of the gross domestic product, more than offset downward revisions to nonresidential fixed investment, exports, private inventory investment, federal and state government spending and residential fixed investment. Earlier this month, surprisingly strong retail sales as well as robust earnings from retailers such as Walmart had already indicated that consumer demand wasn't drying up, even after two years of high inflation.
The latest GDP reading should put to rest the recession fears that briefly gripped Wall Street at the beginning of the month, when weak labor market data had caused some alarm and sparked concerns of a broader economic slowdown. The cherry on the cake of today's GDP report was the fact that the PCE price index, the Fed's preferred inflation gauge, decelerated to 2.5 percent - a 0.1-point downward revision from the advance estimate and a significant reduction from 3.4 percent in the first quarter.
