The US economy grew faster than expected in the second quarter as labour market resilience supported consumer spending, while businesses boosted investment in equipment, potentially keeping a much-feared recession at bay.
While the Department of Commerce’s advance second-quarter gross domestic product (GDP) report on Thursday sketched a picture of sustained strength in domestic demand, inflation subsided considerably last quarter.
That led some economists to believe that the Federal Reserve would not need to raise interest rates beyond this year, but rather keep borrowing costs higher for a while. The United States central bank on Wednesday raised its policy by 25 basis points to a 5.25 percent to 5.5 percent range.
“The economy is more than resilient, solid second-quarter growth shows it has triumphed over the naysayers saying recession was inevitable following the inflation shock and the Fed’s aggressive rates stance to stem it,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
GDP increased at a 2.4 percent annualised rate last quarter. The economy grew at a 2 percent pace in the January-March quarter. Economists polled by Reuters had forecast GDP rising at a 1.8 percent rate in the April-June period.
The government’s measure of inflation in the economy, the price index for gross domestic purchases, increased at a 1.9 percent rate, slowing from the 3.8 percent pace logged in the first quarter. Excluding food and energy, prices rose at a 2.6 percent pace following a 4.2 percent rate of increase in the first quarter.
Source from www.aljazeera.com