The US economy grew at an annualized rate of 2.8% in the second quarter of 2024, surpassing analysts’ expectations of 2.1%. This robust growth rate has sparked optimism for a soft landing, where inflation is controlled without triggering a recession.
This growth marks a significant improvement from the first quarter’s 1.4% rate. Consumer prices increased by 2.6% last quarter, still above the Federal Reserve’s 2% target but down from 3.4% in the first quarter. Household spending, which now accounts for over two-thirds of GDP growth, has been a key driver, although Americans are saving less—about 3.8% of their paychecks compared to 7% before the pandemic.
The positive economic performance suggests the Federal Reserve will likely keep interest rates steady in next week’s meeting, with potential rate cuts in September. The US’s total yearly GDP now stands at approximately $28.6 trillion.
Sven Franssen