US economic growth in Q2 at 2.1% due to reduced business spending.
U.S. economic growth rose slightly less than expected in the second quarter of 2023 due to less business spending.
The Bureau of Economic Analysis released its second preliminary report on U.S. gross domestic product (GDP)—the government’s primary measure of domestic economic activity—for the second quarter on Aug. 30,
The nation’s GDP rose at a 2.1 percent annual rate, which was higher than the preceding quarter’s rate of 2 percent, but below the previous estimate.
The data showed less business investment than had been initially reported, outweighing stronger consumer spending.
Economic Growth Remains Steady
The latest report is a sign that the economy remains steady, despite the Federal Reserve raising interest rates for more than a year in its efforts to curb inflation.
Real GDP growth rose by 2.4 percent, reflecting less inventory and non-residential fixed investment.
“GDP is growing because businesses are vertically integrating their supply chains, so they don’t have to go outside of the country,” RedBalloon CEO Andrew Crapuchettes told The Epoch Times.
“Due to geopolitical tensions and conflict, supply chains to the U.S. can be easily disrupted,” he added.
“Because of this move, there has been growth in the industrial sector which the GDP number measures well. The recent JOLTS report confirms this as there has been a huge demand in blue-collar jobs.”
The publication of the Job Openings and Labor Turnover Survey (JOLTS) showed that the number of job openings fell to 8.8 million last month, the lowest number in over two years.
The U.S. labor market has held up well in spite of the policy rate hikes, but there were some signs of softening.
The next employment report, which measures the job market performance in August, will be released on Sept. 1.
Fear of US Recession in 2023 Ebbs
Consumer spending, which is measured by personal consumption expenditures and is the main driver of the American economy, was revised higher to 1.7 percent.
Disposable personal income was revised to $284.5 billion, or 5.9 percent in the second quarter, while personal savings rose to $892.3 billion, an upward revision of $22.7 billion from the previous estimate.
Gross domestic income (GDI), which is the amount of revenue generated and expenditures incurred from producing goods and services, rose 0.5 percent after declining for two consecutive quarters.
The average of real GDP and GDI, which officially determines the timing of business cycles, followed the average closely, rising 1.3 percent for the quarter, the best result in nearly a year.
The persistently strong labor market and solid consumer spending continues to drive the economy, leading many economists to push their recession forecasts down the road, or drop them entirely.
A decline in GDP is the biggest indicator of an economic downturn or recession, and the two quarters of positive growth have encouraged economists, who had earlier predicted over the past year that the United States would be in heading toward a recession by now.
Fed Likely to Raise Interest Rates in Near Future
Meanwhile, any further acceleration in economic activity may force the Fed to hike rates again to ensure a slowdown output and reduce inflation.
According to the latest Consumer Price Index data, inflation had sl
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