The U.S. economy grew at a faster pace than initially reported in the second quarter, reflecting robust consumer spending and a rebound in corporate profits. The Commerce Department’s latest revision shows GDP expanding at a 3.0% annualized rate, up from the previously reported 2.8%. This marks a significant acceleration from the 1.4% growth rate observed in the first quarter.
Despite the economic upswing, the labor market is showing signs of slowing. New applications for jobless benefits dropped by 2,000 to a seasonally adjusted 231,000 for the week ending August 24, indicating a minor easing in initial unemployment claims. However, the number of individuals receiving ongoing benefits, a gauge for longer-term unemployment, rose by 13,000 to 1.868 million, reflecting extended periods of joblessness.
The data suggests that while the economy remains on a solid growth trajectory, the labor market is struggling with tighter re-employment prospects. Economists anticipate that the unemployment rate for August could remain near its recent high of 4.3% or potentially drop slightly to 4.2%.
Consumer spending, which drives over two-thirds of economic activity, increased at a revised 2.9% rate, up from an earlier estimate of 2.3%. This growth is partly fueled by rising wages, which are enabling consumers to maintain spending despite a decrease in the saving rate to 3.3% from 3.5%.
Corporate profits also saw a notable rebound, climbing by $57.6 billion to a record high following a decline in the previous quarter. This profit increase, combined with steady profit margins, suggests that businesses are better positioned to absorb rising input costs and support further investment.
Inflation remained moderate, improving consumers’ purchasing power. Real disposable income increased at an unchanged rate of 1.0%, indicating stable financial conditions for households. However, the goods trade deficit widened by 6.3% in July to $102.7 billion, driven by a 2.3% surge in imports.
Looking ahead, economists like Gus Faucher of PNC Financial predict that while growth may decelerate in the near term, a recession remains unlikely. The steady economic expansion, supported by strong consumer and corporate performance, underscores a positive outlook despite the challenges in the labor market.
hii Aditi Sahu this side..
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