The latest report from the Bureau of Economic Analysis reveals that the U.S. economy experienced a growth rate of 2.1% in the second quarter of 2023. The figure remained in line with the previous estimate, but there was a small decrease from the revised 2.2% growth observed in the first quarter.[0]
The second-quarter expansion of the nation's gross domestic product (GDP) marked a modest deceleration from the economy's 2.2% annual growth from January through March. However, it did meet the estimate for the latest quarter.[1]
The Bureau of Economic Analysis released its third and final estimate of the gross domestic product, reporting that the economy grew at a 2.1% annual rate in the second quarter of this year, similar to the 2.2% rate in the previous quarter.
While the figure represents a slight deceleration compared to the revised first-quarter US GDP, overall, the US economy displayed moderate growth in the second quarter of 2023, with a mix of positive and negative trends across various sectors.[2]
The 2.1% growth rate in the second quarter was in line with expectations and demonstrated the resilience of the US economy despite higher interest rates. The Federal Reserve has raised its benchmark rate 11 times since March 2022 to combat inflation, which reached a four-decade high last year.[1]
Resilience in consumer spending comes as inflation and rising prices prompted the Federal Reserve to raise interest rates, bringing the federal funds rate to the highest level in 22 years.[3] However, consumer spending rose at a slower pace than initially reported, with an annual rate of just 0.8% from April through June.[4]
The report also highlighted downward revisions in consumer spending, particularly in household utilities, transportation services, furnishings, durable household equipment, clothing, and footwear.[2] However, nonresidential fixed investment, exports, and inventory investment saw upward revisions.
The revisions in export data were driven by an upward adjustment in services, particularly in travel and transport services.[2] Conversely, imports saw a decline primarily due to a downward revision in other business services.[2]
The price index for personal consumption expenditures (PCE) remained stable, with a 2.5% increase in the second quarter, consistent with the prior estimate.[5] Excluding food and energy prices, the core PCE price index also maintained its unchanged 3.7% increase.[5]
While the Fed continues to grapple with inflation, the labor market has remained resilient. The economy added 187,000 jobs in August, beating expectations.[6] However, job gains in June and July were revised down, and the unemployment rate unexpectedly ticked up to 3.8%.[6]
Looking ahead, the next GDP report for the third quarter will be published at the end of October.[3] The Conference Board predicts that economic growth will likely buckle under mounting headwinds early next year, potentially leading to a short and shallow recession.[3]
Overall, the latest GDP figures indicate that the US economy has shown resilience despite higher interest rates and inflationary pressures. However, there are concerns about the sustainability of consumer spending and the potential impact of future rate hikes. The next few months will be crucial in determining the trajectory of the economy and whether it can maintain its growth momentum.
0. “US Revised GDP At 2.1%, Will It Spark Market Gains?” CoinGape, 28 Sep. 2023, https://coingape.com/us-revised-gdp-at-2-1-will-it-spark-market-gains
1. “US Government Estimates Economy Grew Second Quarter at a 2.1% Rate” NEWSnet media, 28 Sep. 2023, https://www.newsnetmedia.com/story/49743554/us-government-estimates-economy-grew-second-quarter-at-a-21-rate
2. “US Economy Shows Moderate Growth in Second Quarter of 2023” Best Stocks, 28 Sep. 2023, https://beststocks.com/us-economy-shows-moderate-growth-in-second-qu/
3. “Final second quarter GDP estimate remained unchanged at 2.1%” Fox Business, 28 Sep. 2023, https://www.foxbusiness.com/personal-finance/final-q2-gdp-unrevised-economic-growth
4. “BEA Revises Spending Lower, Income Higher, With GDP Unchanged for 2023 Q2 – MishTalk” Mish Talk, 28 Sep. 2023, https://mishtalk.com/economics/bea-revises-spending-lower-income-higher-with-gdp-unchanged-for-2023-q2
5. “US Economy Grows By 2.1% In Q2, Lower-Than-Expected Initial Claims Signal Tight Job Market – iShares 20+” Benzinga, 28 Sep. 2023, https://www.benzinga.com/government/23/09/34977155/us-economy-grows-by-2-1-in-q2-lower-than-expected-initial-claims-signal-tight-job-market
6. “GDP grew at 2.1% rate in second quarter, revision shows, defying Fed rate hikes” Washington Examiner, 28 Sep. 2023, https://www.washingtonexaminer.com/policy/economy/gdp-grew-at-2-1-rate-in-second-quarter-revision-shows-defying-fed-rate-hikes
