(NEW YORK) — U.S. economic growth accelerated over three months ending in June, blowing past economist expectations and rebuking concern about a possible recession.
The U.S. gross domestic product grew by a 2.4% annualized rate to finish the first half of 2023, according to government data released Thursday.
The results mark an advance from the 2% annualized GDP growth recorded over the previous quarter. That growth showed a cooling from the 2.6% growth displayed in the quarter before that.
The finding of 2.4% annualized growth over the three months ending in June demonstrates that economic growth has accelerated over that period, dispelling concern among some about a fast-approaching recession.
The heightened growth stems from an increase in consumer and government spending, as well as a jump in business investment in inventory, according to the Bureau of Economic Analysis, the federal agency that releases the GDP data.
A decrease in exports and home investment detracted from the GDP growth, the agency said.
Personal income — an overall measure of a variety of incomes such as wages and rental payments — grew at a slower pace than it had in the previous quarter, the data showed. The personal saving rate, however, inched upward from the previous quarter.
Fears of a recession have cast a thundercloud over the economy for many months but forecasters sun-kissed by falling inflation and a robust jobs market have grown optimistic about the U.S. averting a downturn.
Many observers define a recession through the shorthand metric of two consecutive quarters of shrinking in a nation’s GDP.
The GDP data released on Thursday arrives a day after the Federal Reserve raised interest rates by 0.25%, bringing its benchmark rate to a 22-year high of between 5.25% and 5.5%.
Economists surveyed by Bloomberg, however, think the move constitutes the central bank’s final rate increase of an aggressive series that began in March 2022.
For more than a year, the Federal Reserve has aimed to roll back inflation through interest rate hikes that typically slow the economy and slash consumer demand. The approach, however, risks tipping the economy into a downturn.
The policy appears to have succeeded in cooling prices. Inflation has fallen significantly from a peak last summer but remains one percentage point above the Federal Reserve’s target of 2%.
Some key economic indicators, meanwhile, have sustained robust performance. A jobs report earlier this month showed that the labor market cooled, but still grew at a solid clip in June, adding 209,000 jobs.
“The U.S. economy has actually been quite resilient,” Fed Chair Jerome Powell said late last month in Sentra, Portugal, at a conference organized by the European Central Bank.
Nearly three-quarters of forecasters surveyed by the National Association for Business Economics said that the probability of the U.S. entering a recession in the next 12 months is 50% or less, the organization announced on Monday.
On Tuesday, the International Monetary Fund released fresh projections showing an improved outlook for the global and U.S. economy. The organization said it expects the U.S. economy to grow 1.8% this year, a revision upward from a previous estimate released in April.
“The global economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine, but it is not yet out of the woods,” Pierre-Olivier Gourinchas, IMF chief economist and research department director, said at a press conference on Tuesday.
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