The U.S. economy showed few signs of recession in the second quarter, as gross domestic product grew at a faster than expected pace during the period, the Commerce Department reported Thursday.
GDP, the sum of all goods and services activity, increased at a 2.4% annualized rate for the April-through-June period, better than the 2% consensus estimate from Dow Jones. GDP rose at a 2% pace in the first quarter.
Markets moved higher following the report, with stocks poised for a positive open and Treasury yields on the rise.
Consumer spending powered the solid quarter, aided by increases in nonresidential fixed investment, government spending and inventory growth.
Perhaps as important, inflation was held in check through the period. The personal consumption expenditures price index increased 2.6%, down from a 4.1% rise in the first quarter and well below the Dow Jones estimate for a gain of 3.2%.
Consumer spending, as gauged by the department’s personal consumption expenditures index, increased 1.6% and accounted for 68% of all economic activity during the quarter.
In the face of persistent calls for a recession, the economy showed surprising resilience despite a series of Federal Reserve interest rate increases that most Wall Street economists and even those at the central bank expect to cause a contraction.
Growth hasn’t posted a negative reading since the second quarter of 2022, when GDP fell at a 0.6% rate. That was the second straight quarter of negative growth, meeting the technical definition of a recession. However, the National Bureau of Economic Research is the official arbiter of expansion and contractions, and few expect it to call the period a recession.
Thursday’s report indicated widespread growth.
Gross private domestic investment increased by 5.7% after tumbling 11.9% in the first quarter. A 10.8% surge in equipment and a 9.7% increase in structures helped power that gain.
Government spending increased 2.6%, including a 2.5% jump in defense expenditures and 3.6% growth at the state and local levels.
Separate reports Thursday brought more positive economic news.
Durable goods orders for items such as vehicles, computers, and appliances rose 4.7% in June, much higher than the 1.5% estimate, according to the Commerce Department. Also, weekly jobless claims totaled 221,000, a decline of 7,000 and below the 235,000 estimate.
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