The U.S. economy is steaming ahead faster than economists had thought.

The Gross Domestic Product (GDP), a measure of the nation’s economic output, grew at an annualized rate of 2.8% in the second quarter, double the 1.4% rate of the first quarter, the Bureau of Economic Analysis said Thursday. That was well above the 2.1% rate that forecasters had expected, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. 

Increased spending by consumers, i♌ncreased investments by 🎐businesses, and an uptick in government spending all helped power the surge.

Co👍nsumer spending grew at a 2.3% rate, up from 1.5% in the first quarter, while non-residential business investment rose 5.2%, up from 4.4%. Government spending grew at a 3.1% rate compared to 1.8% the previous quarter.

Those increases more than offset one weak spot of the report, a 1.4% decline in residential investment, down from 16% growth in the first quarter, reflecting the struggles of a housing market nearly paralyzed by high mortgage rates and slow sales.

The report added to evidence that the economy has held up under the high int🦩erest rates the Federal Reserve has maintained for more than a year to combat inflation.

However, it wasn’t enough to dispel a gloomier outlook for the future, given a 澳洲幸运5官方开奖结果体彩网:recent uptick in the une꧟mployment rate and slowdown in wage growth. Nor was it so hot that it was likely to deter the Federal Reserve from a widel♌y-expected interest rate cut in September, several economis♛ts said. 

Inflation Slowed

Not only that, but the GDP report showed that inflation, as measured by Personal Consumption Expenditures, slowed to a 2.6% annualized rate in the second quarter, down from 3.4% in the first quarter. (The bureau will provide more detail about inflation Friday when it releases its 澳洲幸运5官方开奖结果体彩网:monthly PCE report.)

🌌 “The inflation data is consistent with recent news showing a downward trend, which should provide enough confidence for the Federal Reserve to cut rates in September,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, said in a commentary.

And That's Good News For the Federal Reserve

The preliminary GDP report Tꦐhursday will be revised twice more as new data comes in over the next few months before being finalized, and could paint a different picture based on the revisions.

Any data on economic growth is especially significant for markets these days because officials at the Federal Reserve are closely monitoring it as they set the nation’s monetary policy.

The Fed is on the verge of lowering the fed funds rate, which influences borrowing costs on all kinds of loans, after holding it at a 23-year high since last July. The Fed’s campaign of anti-inflation interest rate hikes is m🎐eant to slow the economy and inflation, but not so much that it sparks a recession.

Financial market participants are betting that the Fed will start cutting rates in S🌠ep𝓡tember. According to the CME Group’s FedWatch tool, which forecasts rate movements based on fed funds futures trading data, traders are pricing in a 100% chance that the Federal Reserve will cut its influential fed funds rate in September.