The Commerce Department’s initial estimate revealed that the economic activity in the United States outperformed expectations in the second quarter of 2024, driven by robust consumer spending, government expenditures, and a substantial increase in inventories.
The real gross domestic product (GDP) showed a stronger-than-expected growth rate of 2.8% on an annualized basis, adjusted for seasonality and inflation, surpassing economists’ forecasts of 2.1% growth after a 1.4% increase in the preceding quarter.
Key contributors to the growth included solid consumer spending, private inventory investment, and nonresidential fixed investment. Personal consumption expenditures, a vital indicator of consumer behavior, rose by 2.3% in the quarter, compared to a 1.5% increase in Q1, with notable increases in both services and goods spending.
Moreover, inventories played a significant role in boosting the GDP growth, contributing 0.82 percentage point to the overall gain. Government spending also provided momentum, particularly at the federal level, with a 3.9% increase, driven by a 5.2% surge in defense outlays. However, imports, which detract from GDP, surged by 6.9%, the largest quarterly increase since Q1 of 2022, while exports only saw a modest 2% growth.
The report led to an uptick in stock market futures and a decline in Treasury yields, reflecting a positive market sentiment following the release of the strong Q2 economic data.
