The numbers: The U.S. economy grew at a solid 2.1% annual pace in the second quarter, revised figures show, but consumer spending turned out to be weaker than originally reported.
The increase in household spending was chopped to 0.8% from a prior estimate of 1.7%. Consumer spending is the main engine of the economy.
Yet more recent evidence suggests consumer spending rebounded in the third quarter, as did the broader economy. GDP is forecast to rise 4% or more in the third quarter running from July to September.
Gross domestic product is the official scorecard of sorts for the economy. The report is updated twice after the preliminary estimate.
The second-quarter estimate was unchanged from the prior 2.1% reading.
Read: Two new inflation reports were just released. The Fed is watching.
Key details: Offsetting the downward revision in consumer spending, business investment was a bit stronger than originally reported.
Companies such as chipmakers have spent more on plants and equipment due to generous government subsidies for green-energy projects and “reshoring” — bringing back manufacturing operations to the U.S.
The change in inventory levels were also revised upward.
Exports were less of a drag on GDP, too.
Most other figures in the report were little changed.
The next GDP report, for the third quarter, will be published at the end of October.
Big picture: The third and final read of second-quarter is a backward-looking indicator, but it underscores the surprising resilience of the economy in the face of rising interest rates and still-high inflation.
The economy is facing more strains, however, and growth is likely to slow in the months ahead. Higher borrowing costs are especially hurting the housing market and other interest-rate sensitive parts of the economy.
Looking ahead: “Given how much the [Federal Reserve] has raised rates, it’s impressive that the economy is still growing at an inflation-adjusted rate of 2.1%,” said Chris Zaccarelli, chief investment officer at the Independent Advisor Alliance. “We believe that a recession is inevitable, but we have been surprised by the resilience of the consumer.”
Market reaction: The Dow Jones Industrial Average
DJIA,
and S&P 500
SPX,
rose in Thursday trades.
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