The U.S. economy grew faster in the second quarter of 2024 than first reported, suggesting there was little sign of a slowdown through the first six months of the year.
The latest reading of the gross domestic product (GDP) published by the Commerce Department came in at 3%, up from an initial estimate of 2.8%. The change was driven by personal spending, which advanced 2.9% compared with the prior estimate of 2.3%.
GDP is the largest single measure of economic activity, capturing consumption, investment, government spending and trade.
The U.S. economy continues to demonstrate resiliency despite various headwinds. Inflation remains higher than the Federal Reserve’s 2% target but remains well below its pandemic-era peak of more than 9% — and earnings for the typical worker have been keeping pace. Meanwhile, layoffs remain subdued even as the unemployment rate is up from historic lows.
As the GDP report was being released Thursday, the Department of Labor published initial unemployment claims data showing a stable rate of filings for jobless benefits.
“Another blow to the doom & gloom crew while the current economic expansion keeps on keeping on,” Joe Brusuelas, principal and chief economist at RSM U.S. LLP financial group, posted on X Thursday. “This economy is neither in recession nor is it at risk of an imminent end to the current business cycle.”
To be sure, not all Americans are staying afloat, let alone thriving. About an equal share of respondents to the Conference Board’s monthly consumer confidence survey rate their family’s current financial situation as “good” as those who say “bad,” and the overall confidence level remains below pre-pandemic levels.
The mixed picture was further illustrated in earnings reports released Thursday. While Dollar General flagged “financially constrained” consumers as partly to blame for a disappointing report that sent its stock plummeting, Best Buy raised its fiscal year guidance.
“We see a consumer who is seeking value in sales events and one who is also willing to spend on high-price-point products when they need to or when there is new, compelling technology,” Best Buy CEO Corie Barry said during the company’s earnings call.
Stock market indexes responded positively to the latest data, opening higher. Meanwhile, the odds of the Federal Reserve cutting interest rates by 50 basis points next month fell, signaling a growing expectation by the market that the Fed will cut rates, but not take drastic action.
“Overall, the (GDP) release looks like a very strong real economy with an especially strong household sector but also forward-looking businesses appearing very optimistic,” Harvard economist and former Obama economic adviser Jason Furman said on X, adding that additional data showed inflation decelerating.
Q3 GDP estimates are currently around 2%, he said, and the Fed is still likely to cut interest rates given rising unemployment.
But in general, he said, “the economy is looking in fine shape overall.”