U.S. Economy Grew At A 3% Rate Last Quarter, Government Reports

The US economy grew at a robust 3% annual rate from April through June, driven by strong consumer spending and business investment, according to a report from the Commerce Department.

The third and final GDP estimate for the April-June quarter also indicated that inflation continues to decline, nearing the Federal Reserve’s 2% target.

The government left its previous estimate unchanged, Paul Wiseman reported for the Associated Press (AP).

The nation’s gross domestic product (GDP) — the total output of goods and services — surged in the second quarter, up from the modest 1.6% annual rate recorded in the first three months of the year.

Consumer spending, which is the main engine of the economy, grew at a 2.8% pace, slightly down from the earlier estimate of 2.9%. Business investment showed even stronger growth, increasing at an annual rate of 8.3%, led by a 9.8% rise in investment in equipment.

The third and final GDP estimate for the April-June quarter also indicated that inflation continues to decline, nearing the Federal Reserve’s 2% target.

The Fed's preferred inflation measure — the personal consumption expenditures (PCE) index — rose at a 2.5% annual rate last quarter, down from 3.4% in the first quarter. Excluding volatile food and energy prices, core PCE inflation grew at a 2.8% pace, down from 3.7% in the first quarter.

Despite 11 interest rate hikes by the Federal Reserve in 2022 and 2023, the US economy has remained resilient. Annual inflation, as measured by the consumer price index (CPI), has fallen from a peak of 9.1% in mid-2022 to 2.5%.