Topline
The U.S. economy grew faster than expected during 2023’s second quarter as it remains surprisingly resilient against an unfriendly macro backdrop and shakes off persistent predictions for a recession.
The U.S. economy does not appear on the brink of a recession.
Key Facts
Gross domestic product rose by 2.4% on an annual basis during the three-month period ending June 30, according to the Bureau of Economic Analysis’ first GDP estimate released Thursday.
That well exceeds consensus economic estimates that the economy grew at the same 2% pace it did during the first quarter.
Thursday’s report revealed signs of a labor market slowdown even as the economy notched its fourth-consecutive quarter of growth, as the government reported a moderation in personal income growth from $278 billion to $236 billion over the last two quarters and a deceleration in inflation-adjusted disposable income growth from 8.5% and 2.5%.
Stock futures rose after the release, with the S&P 500 and tech-heavy Nasdaq each set to open up about 1% thanks also to a strong earnings report from Meta, yet another mega-cap company which posted strong financials during last quarter.
Key Background
The U.S. entered a technical recession last year when GDP fell for two consecutive quarters, but the economy has fought off a more painful downturn, and the official recession many experts predicted has yet to materialize. After a two-year period of strong economic growth and high inflation, the Federal Reserve increased interest rates from near zero to above 5% over the last 18 months, attempting to rein in consumer price increases—and simultaneously slow the economy. Despite prior warnings, Fed chairman Jerome Powell said Thursday that the central bank no longer expects the U.S. to enter a full-blown recession, citing the “resiliency” of the economy.
Further Reading
Fed Hikes Interest Rates By 25 Basis Points To Highest Level Since 2001 (Forbes)
Fed Staff No Longer Predict Recession As Inflation Cools (Forbes)
