Revised Q2 Annual GDP Growth Rate for US Slightly Lower at 2.1% Instead of 2.4%

31 Aug, 2023

Revised Q2 Annual GDP Growth Rate for US Slightly Lower at 2.1% Instead of 2.4%

Revised data released on August 30 reveals that the US economy expanded at an annual rate of 2.1% during the April-June quarter, slightly below the initial estimate of 2.4%. The US Commerce Department's second growth estimate for the quarter showed a modest acceleration from the 2% annual growth rate observed from January to March. The expansion was propelled by heightened consumer expenditures and enhanced business investments.

Despite the Federal Reserve's aggressive interest rate hikes aimed at curbing inflation, the largest global economy has demonstrated resilience. The aggressive rate hike cycle, which began in March of the previous year, saw the benchmark rate raised 11 times, resulting in higher borrowing costs for various purposes.

Although there were predictions of an impending recession due to these rate hikes, the US economy managed to sustain expansion in subsequent quarters. After reaching a peak of 9.1% in June 2022, year-over-year inflation has gradually decreased. In the latest report, it stood at 3.2%, a marked improvement although still higher than the Federal Reserve's 2% inflation target.

Market reactions on August 30 were positive, as stocks demonstrated gains amidst indications of a cooling job market alongside resilient economic growth. The S&P 500 rose by 0.5%, continuing its recovery from losses in the preceding month. The Dow Jones Industrial Average climbed by 0.4%, equivalent to 131 points, reaching a level of 34,984. Additionally, the Nasdaq composite experienced a 0.7% increase.