The US Economy Surges Ahead in Second Quarter
The latest data released by the Bureau of Economic Analysis has revealed that the US economy grew at a faster pace than expected in the second quarter. The advance estimate of first quarter US gross domestic product (GDP) showed a robust annualized growth rate of 2.8%, surpassing the 2% growth forecasted by economists surveyed by Bloomberg. This figure also outperformed the first quarter GDP, which was revised down to 1.4%.
In addition, the “core” Personal Consumption Expenditures index, which excludes the volatile food and energy categories, experienced growth of 2.9% in the first quarter. While this was higher than the estimated 2.7%, it was notably lower than the previous quarter’s 3.7% gain.
Investors are closely monitoring these economic indicators to assess the Federal Reserve’s potential decision to cut interest rates and achieve a soft landing for inflation. Market expectations had already priced in a 100% chance of the Fed cutting rates by the end of its September meeting.
Neil Dutta, the head of economic research at Renaissance Macro, emphasized that the latest data gives the Fed more time to make informed decisions. With private domestic demand growing steadily in the second quarter, there is no rush for the central bank to act. Dutta predicts that July’s meeting sets the stage for a potential rate cut in September.
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