The US economy expanded at a solid 3% annual rate in the second quarter of 2024, according to data from the Commerce Department’s Bureau of Economic Analysis.
This growth was in line with expectations from economists, who had projected a similar rate following an advance reading in July.
Revised estimates also showed the first-quarter GDP growth was slightly stronger than initially reported, rising to 1.6% from 1.4%. This follows a 3.4% expansion in the fourth quarter of 2023, demonstrating steady, if uneven, growth.
Key drivers of the second-quarter improvement include a notable rise in consumer spending and business investment. Consumer spending, which makes up approximately two-thirds of GDP, grew 2.8% in the second quarter, up from 1.9% in the first quarter. The increase was primarily driven by higher demand for goods.
Business investment also surged, rising 8.3%, with nonresidential investment, particularly in equipment, being the primary contributor. Meanwhile, residential investment continued to decline, falling 2.8%.
In addition to economic output, the report highlighted an upward revision in personal income figures. Current-dollar personal income grew by $315.7 billion, an $82.1 billion increase over previous estimates. Disposable personal income, which increased by 5%, was also revised upward by $77.3 billion. Personal savings for the quarter were higher than expected, with a revised savings rate of 5.2%, slightly lower than the first-quarter rate of 5.4%.
The report also revealed a narrower gap between GDP and gross domestic income (GDI), with GDI growing at a 3.4% pace after a 2.1% upward revision. The improved alignment between these two measures suggests a stronger economic foundation.
Michael Pearce, deputy chief economist at Oxford Economics, noted that the revisions support confidence in continued economic growth. He expects the Federal Reserve’s recent interest rate cuts to foster further expansion, though the economy faces challenges such as a slowing labor market and rising unemployment.
The US economy’s resilience has been evident as growth has stayed between 2.8% and 3.2% for five consecutive quarters, marking the strongest stretch since 2006. Despite these gains, sectors such as housing and manufacturing continue to feel the impact of high interest rates.
Looking ahead, early forecasts suggest the US economy will maintain a similar pace in the third quarter, with projections just under 3%.
FOX Business, Market Watch, the New York Times contributed to this report.
