The economy picked up sharply in the second quarter as a rise in consumer and business spending offset a drop in housing construction and a widening trade gap.
The nation’s gross domestic product, the value of all goods and services produced in the U.S., expanded at a seasonally adjusted annual rate of 2.8% in the April-to-June period, the Commerce Department said Thursday. That’s up from a tepid gain of 1.4% early this year and 2.5% increase for all of 2023.
Forecasters surveyed by Bloomberg had projected a 1.9% increase.
Is the economy doing well right now?
The economy has been surprisingly resilient despite high interest rates and inflation the past two years as a result of strong job and wage gains that have provided consumers the wherewithal to keep spending.
But cracks are beginning to show as high borrowing costs take a bigger toll on households and companies.
Is US consumer spending increasing or decreasing?
In the second quarter, consumer spending increased a solid 2.3% annualized, above the 1.5% pace early this year but just below the more than 3% clip in the second half of 2023. Consumption makes up about 70% of economic activity.
To fuel their purchases, Americans are spending more of their paychecks, saving about 3.8% of their monthly income, well below the average 7% or so they socked away before the pandemic. As a result, they don’t have much cushion. Low and middle-income households have largely depleted their COVID-19-related reserves. Credit card debt is…
