According to new data released by the Bureau of Economic Analysis, an agency of the US Department of Commerce, the US gross domestic product (GDP) increased by 2.4% between April and June.
The data shows an increase in consumer spending, nonresidential fixed investment, private inventory investment, and spending by local, state and federal governments. However, exports and imports both decreased, as well as residential fixed investment. There were also modest increases in personal income and personal savings.
Still, according to analysts, the BEA data showed signs of a slowdown coming, as the growth in personal income and disposable income were much smaller than they had been. Indeed, many economic forecasts put third quarter growth below a 1% increase.
The news comes as the Federal Reserve, the nation’s central bank, modestly increased interest rates on Wednesday, bringing the effective federal funds rate to a 22-year high. Investors had feared for weeks that another rate hike was coming, since while inflation had decreased from its highs last summer, it has remained well above the 2% target set by the Fed, and strong employment data released earlier this month meant the Fed had increased wiggle room to raise interest rates more.
"There will be a point, due to rising business costs and higher consumer finance costs, that the economy will slow," Joe Brusuelas, chief economist for RSM US, told US media. "But right now, the argument for a ‘soft landing’ is clearly resonating in a way it hasn’t over the past two years."