The U.S. economy grew at a 2.2% annual rate in the second quarter, according to a revised estimate released Wednesday by the Commerce Department. The figure is well above the department’s previous estimate of 1.5% and surprised economists, who had expected little or no change from that earlier reading.
Growth had slowed from a 2.5% pace in the first quarter of the year, but the upward revision suggests the economy performed better in the April-through-June period than initially thought.
Consumer spending, which makes up about 70% of all U.S. economic activity, was a major driver of the improved numbers. Spending rose at a 3.8% annual pace in the second quarter, a sharp jump from just 0.7% in the first quarter. Analysts have pointed to a strong stock market, buoyed in part by investor enthusiasm over artificial intelligence, as one factor supporting spending, particularly among wealthier households.
Inflation data released alongside the GDP figures also came in below expectations. The Personal Consumption Expenditures (PCE) price index rose 0.3% month over month, slightly under the 0.4% economists had forecast. On a year-over-year basis, PCE inflation came in at 3.4%, below the expected 3.7%. Core PCE, which excludes volatile food and energy prices, rose 0.2% month over month against expectations of 0.3%, and was up 3% year over year compared with a forecast of 3.3%.
Taken together, the data show growth running higher than projected while inflation runs lower, a combination that market commentators described as a positive surprise. One financial analyst, reacting to the release, said the inflation figures looked
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