The U.S. economy displayed robustness in the second quarter, defying recession concerns, as reported by the Commerce Department on Thursday.

Gross Domestic Product (GDP), the total value of goods and services produced, grew at a faster-than-expected annualized rate of 2.4% for the period from April to June.

This outperformed the consensus estimate of 2% by Dow Jones and also exceeded the 2% pace seen in the first quarter, CNBC reported.

Following the positive report, the markets reacted with optimism, leading to a rise in stock values and an increase in Treasury yields.

The solid performance in the quarter was primarily driven by strong consumer spending, supported by increases in nonresidential fixed investment, government spending, and inventory growth.

It’s worth noting that inflation remained under control during this period.

The personal consumption expenditures price index rose by 2.6%, a significant decrease from the 4.1% increase in the first quarter and also below the Dow Jones estimate of 3.2%.

Consumer spending, which accounted for 68% of all economic activity in the quarter, grew by 1.6% according to the department’s personal consumption expenditures index.

While this represented a slight pullback from the 4.2% increase in the first quarter, it demonstrated resilience despite higher interest rates and persistent inflation, as reported by CNBC.

Despite widespread predictions of a recession and a series of interest rate hikes by the Federal Reserve, the economy surprisingly showed resilience and performed well.

Both Wall Street economists and those at the central bank had expected these rate increases to lead to a contraction, but the economy proved otherwise.

Written by staff