The Bureau of Economic Analysis (BEA) just revised second-quarter Real GDP growth upward to 2.2%. The previously released estimate of 1.5% was lower than we had expected and raised concerns about the state of the economy when it was released. They also revised Q1 data up to 2.5% from 2.1%. The new figures align with long-term growth trends for the U.S.
Consumer spending is driving the shift upward. Consumer spending, which accounts for nearly 70% of U.S. GDP, rose 3.8% in Q2. Although consumer confidence has dropped to its lowest level since 2014, U.S. consumers remain resilient in their spending.
Real GDP growth came from real estate, information, durable goods manufacturing, and finance and insurance.
Inflation
We also had good news on inflation. The Personal Consumption Expenditures, the Federal Reserve’s preferred inflation measure, came in at 3.4%. This figure was below expectations and continues the trend of decreasing inflation (disinflation, not deflation).