Live Fact Check: Democratic National Convention Night 2
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WASHINGTON (AP) — The nation’s economy accelerated last quarter at a healthy 2. 8 percent annual pace, and consumers and businesses helped spur the expansion despite pressure from persistently high interest rates.
The report released Thursday via the Commerce Department said gross domestic product (the economy’s total output of goods and goods) rebounded in the April-June quarter, after developing at a 1. 4% speed in the January-March period consistent with the period. expansion rate of 1. 9 consistent with the cent.
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Consumer spending, the center of the U. S. economy, helped drive the expansion last quarter. It grew at an annual rate of 2. 3% in the April-June quarter, to 1. 5% in the January-March period. Spending on goods, such as cars and appliances, rose at a 2. 5% rate after falling to a 2. 3% rate in the first 3 months of the year.
Business investment increased last quarter, driven by an 11. 6% year-over-year increase in appliance investment. Growth also accelerated because companies increased their inventories. On the other hand, a strong increase in imports, which are subtracted from GDP. , reduced the expansion through emissions of around 0. 9% from April to June.
Despite last quarter’s rise, the U. S. economy, the world’s largest, has slowed below borrowing rates in decades, set through the Federal Reserve to combat peak inflation. From mid-2022 to 2023, annualized GDP expansion exceeded 2% for six consecutive quarters. In the last two quarters of last year, GDP grew at physically powerful rates of 4. 9 percent and 3. 4 percent.
Federal Reserve officials have made it clear that with inflation nearing their 2% target, they are in a position to start cutting interest rates soon, which they are expected to do in September.
“It’s the best report for the Fed,” Olu Sonola, head of economic studies at Fitch Ratings, said of Thursday’s GDP numbers. “Growth in the first half is not too strong, inflation continues to cool and the elusive situation of a comfortable landing turns out to be within our reach. “
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The state of the economy captured the attention of Americans as the presidential crusade intensified. Although inflation has slowed sharply, from 9. 1% in 2022 to 3%, costs remain above their pre-pandemic levels.
This year’s economic slowdown reflects, in large part, much higher borrowing rates for home and auto loans, credit cards and many business loans, a result of the Federal Reserve’s competitive series of interest rate increases. .
The Federal Reserve’s rate hikes (11 of them in 2022 and 2023) were a reaction to skyrocketing inflation that began in the spring of 2021 when the economy recovered at an unforeseen speed from the COVID-19 recession, causing severe supply shortages. Russia’s invasion of Ukraine in February 2022 has made the situation worse by inflating the costs of energy and grain on which the world depends. Prices have risen across the country and around the world.
Economists have long predicted that higher borrowing prices would push the United States into recession. Still, the economy has continued to move forward. Consumers, whose spending accounts for about 70% of GDP, have continued to shop, emboldened by a strong and tough market and the savings they had accumulated during COVID-19 lockdowns.
The slowdown earlier this year was largely due to two factors, each of which can vary greatly from quarter to quarter: an increase in imports and a decline in business inventories. None of these trends reveal much about the underlying fitness of the economy.
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