US Q2 GDP grows more quickly than expected

25th Jul 2024 14:25

(Sharecast News) - America's economy grew more quickly than expected last quarter as companies ramped up investment and amid inventory accumulation.

According to the US Department of Commerce, gross domestic product expanded by 2.8% in quarterly annualised terms during the second quarter.

That was up from the 1.4% clip observed during the first three months of 2024 and ahead of the 2.0% pace anticipated by economists.

Growth in household consumption picked up to 2.3%, after 1.5% in the first three months of 2024, while private investment was ahead by 8.4% on the back of an 11.6% surge in outlays on equipment.

Public sector spending also accelerated, to 3.1%, and inventory accumulation added 0.82 percentage points to growth.

The latter offset a 0.72 percentage point drag from net trade as imports raced ahead by 6.9%.

On the inflation front, the rate of increase in the price deflator for personal consumption expenditures slowed from 3.7% in the first quarter to 2.9% in the second.

Stephen Brown, deputy chief North America economist at Capital Economics, said: "The sharper-than-expected pick-up in second-quarter GDP growth to 2.8% annualised should make the Fed a bit more comfortable about keeping policy unchanged next week, but the recent loosening of labour market conditions and signs of slower price growth still mean that there is a strong case for a cut at the following meeting in September."

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