The U.S. economy experienced a 2.1% annualized growth rate in the second quarter, according to the Commerce Department’s recent report. This figure, adjusted for seasonal effects and inflation, represents a slightly slower pace than initially estimated.
Factors Contributing to the Revision
The downward revision can primarily be attributed to lower estimates of private inventory investment and nonresidential construction. However, the report also highlights an upward revision in state and local government spending.
Optimism for Summer Growth
Economists remain optimistic about the potential for an economic upswing during the summer months. The Federal Reserve Bank of Atlanta forecasted a growth rate of 5.9% for the period spanning July to September. Additionally, S&P Global Market Intelligence projected a 3.3% growth rate for the third quarter, driven by strong retail sales. Notably, retail sales experienced a seasonally adjusted increase of 0.7% last month, marking the strongest pace recorded this year.
Revised Estimate and Upward Momentum
Initially, the Commerce Department estimated a 2.4% growth rate for the second quarter, signaling an improvement from the 2% growth rate observed in the first quarter.
Over the past year, the economy has demonstrated steady growth following a brief contraction in early 2022. This sustained expansion has been fueled by a robust labor market, effectively supporting consumer spending. Household expenditures grew at a pace of 1.7% during the second quarter, albeit lower than the 4.2% observed in the first three months of the year.