The U.S. economy grew 3% in the second quarter, faster than initially expected

The U.S. economy grew faster in the second quarter of 2024 than initially expected, suggesting there were few signs of a slowdown in the first six months of the year.

The latest gross domestic product (GDP) figure released by the Ministry of Commerce came in at 3%, compared to an initial estimate of 2.8%. This change was driven by personal spending, which rose 2.9% compared to the previous estimate of 2.3%.

GDP is the broadest single measure of economic activity, taking into account consumption, investment, government spending and trade.

The U.S. economy continues to show resilience despite various obstacles. Inflation remains above the Federal Reserve’s 2% target but well below its pandemic-era peak of more than 9%, and incomes for the average worker have kept pace. At the same time, layoffs remain muted, even as the unemployment rate is up from its historic lows.

As the GDP report was released Thursday, the Labor Department released initial jobless claims data, showing a steady rate of unemployment claims.

“Another blow to the pessimistic team as the current economic expansion continues,” Joe Brusuelas, principal and chief economist at RSM US LLP, said Thursday on X. “This economy is neither in recession nor in imminent danger of the end of the current economic cycle.”

To be sure, not all Americans are staying afloat, much less thriving. Roughly equal shares of respondents to the Conference Board’s monthly consumer confidence survey rate their family’s current financial situation as “good” as those who rate it as “bad,” and overall confidence remains below pre-pandemic levels.

The picture is even more mixed in financial results released Thursday. While Dollar General blamed “financially constrained” consumers for a disappointing report that sent its stock down, Best Buy raised its forecast for the current fiscal year.

“We see a consumer who is looking for value in sales events and is also willing to spend on high-ticket products when they need them or when there is compelling new technology,” Best Buy CEO Corie Barry said during the company’s earnings call.

Stock indices reacted positively to the latest data, opening higher. At the same time, the probability of a 50 basis point interest rate cut by the Federal Reserve next month has decreased, indicating that the market increasingly expects the Fed to cut rates, but without taking drastic measures.

“Overall, the (GDP) release shows a very strong real economy, with a particularly strong household sector, but also forward-looking businesses that seem very optimistic,” Jason Furman, a Harvard economist and former Obama economic adviser, told X, adding that additional data showed inflation decelerating.

GDP estimates for the third quarter are currently around 2%, he said, and the Fed is still likely to cut interest rates given rising unemployment.

But overall, he added, “the economy looks to be in good shape overall.”

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