The U.S. economy grew at a 3% annual pace in this year’s second quarter, fueled by strong consumer spending and business investment.
The U.S. Commerce Department reported that America’s gross domestic product (GDP), which measures a country’s output of goods and services, expanded 3% from April through June this year. That was a sharp increase from annualized growth of 1.6% recorded in the first quarter.
This was the Commerce Department’s final estimate of Q2 GDP. The federal agency left its preliminary estimate of 3% unchanged. The Commerce Department is scheduled to release its initial estimate of third-quarter GDP on October 30.
Consumer Spending Powers America’s Economy
Consumer spending continues to power the world’s biggest economy. Commerce Department data showed that consumer spending rose at an annual rate of 2.8% in Q2. At the same time, business investment across the U.S. remains robust, rising an annualized 8.3%, led by a nearly 10% increase in investments made in equipment.
The Commerce Department also noted that, despite persistent inflation and high interest rates used to lower it, the U.S. economy has remained resilient. Consumers, in particular, continue spending. America’s industrial production also remains strong, and the pace of single-family-home construction picked up in Q2 of this year.
Earlier in September, the U.S. Federal Reserve lowered interest rates by 50-basis points as inflation moves closer to the central bank’s 2% annualized target.
How Has the Market Performed?
The SPDR S&P 500 ETF Trust (SPY), which tracks the benchmark S&P 500 index, has gained 21% so far this year as stocks continue to rise. News of Q2 GDP growth in the U.S. could further fuel investor confidence in equities.
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