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US Economy Grows 2.2% in Second Quarter, Government Says
The US economy grew during the second quarter of the year.
It expanded at an annual rate of 2.2% from April through June.
People spent much more money than they did in the first quarter.
Businesses also invested heavily, especially in technology connected to artificial intelligence.
Imports rose sharply, which lowered the total growth number.
A broader measure of economic strength grew even faster, at 4.6%.
The housing market improved slightly despite high mortgage rates.
One economist warned that the economy could weaken if excitement about artificial intelligence fades.
The US economy grew at a 2.2% annual pace from April through June, according to the Commerce Department.
The revised growth estimate exceeded the department’s earlier 1.5% figure and economists’ expectations of little or no change.
Consumer spending rose 3.8%, while business investment excluding housing increased 9%.
Imports climbed 12.6% and reduced reported second-quarter growth by nearly 1.7 percentage points.
Underlying economic growth, excluding volatile government spending and trade, accelerated to 4.6%, but analysts warned of risks from heavy reliance on artificial intelligence investment.
- Who
- The United States economy, consumers, businesses, and the Commerce Department are central to the report; economist Michael Pearce provided analysis.
- What
- The Commerce Department reported that gross domestic product grew at a 2.2% annual pace in the second quarter.
- Where
- The United States.
- When
- From April through June; the report was released Wednesday, October 1, and the first third-quarter estimate is due October 29.
- Why
- Growth was supported by consumer spending and business investment, particularly investments related to artificial intelligence, while higher imports reduced the headline growth rate.
Growth Optimists
AI-Reliance Critics
Economic strength
Growth Optimists
Strong consumer spending, business investment, and 4.6% underlying growth show that the economy remained resilient.
AI-Reliance Critics
Recent growth is increasingly dependent on artificial intelligence investment and wealth effects that boost spending by higher-income households.
Outlook
Growth Optimists
The economy performed solidly despite energy-price pressures and other challenges, with housing investment also turning positive.
AI-Reliance Critics
A sudden reversal in optimism about artificial intelligence could make the economy vulnerable to weaker investment and spending.
Key facts
- Second-quarter GDP growth
- 2.2% annual pace
- Previous GDP estimate
- 1.5%
- Consumer spending growth
- 3.8% annual pace
- Business investment excluding housing
- 9% annual pace
- Import growth
- 12.6% annual pace
- Impact of imports
- Reduced second-quarter growth by nearly 1.7 percentage points
- Underlying growth measure
- 4.6%, excluding volatile government spending and trade
- Housing investment
- Rose 2.8%
Quotes
Michael Pearce
Chief U.S. economist at Oxford Economics
“The economy is increasingly reliant on AI gains and the corresponding wealth effects boosting higher-income households' spending power to fuel recent growth. The economy remains sensitive to a sudden reversal of optimism on AI.”
livemint.com
Sources
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