Kubota tractors are stored in Uniontown, Pa., Friday, June 9, 2023. On Thursday, the Commerce Department issues its first of three estimates of how the U.S. economy performed in the second quarter of 2023. (AP Photo/Gene J. Puskar)
The U.S. economy surprisingly accelerated to a 2.4% annual growth rate from April through June, showing continued resilience in the face of steadily higher interest rates resulting from the Federal Reserve.
Thursday’s estimate from the Commerce Department indicated that the gross domestic product — the economy’s total output of goods and services — picked up from the 2% growth rate in the January-March quarter. Last quarter’s expansion was well above the 1.5% annual rate that economists had forecast.
Driving last quarter’s growth was a burst of business investment. Excluding housing, business spending surged at a 7.7% annual rate, the fastest such pace since early 2022. Companies plowed more money into factories and equipment. Increased spending by state and local governments also helped fuel the economy’s expansion in the April-June quarter.
“This is a strong report, confirming that this economy continues to largely shrug off the Fed’s aggressive rate increases and tightening credit conditions,” said Olu Sonola, head of U.S. economics at Fitch Ratings.
Jobless claims hit 5-month low
The number of Americans applying for jobless benefits slid last week to its lowest level in five months, further evidence that the U.S. labor market continues to defy the Federal Reserve’s attempts to cool it off.
U.S. applications for unemployment benefits fell by 7,000 to 221,000 for the week ending July 22, from 228,000 the week before, the Labor Department reported Thursday. That’s the fewest since February.
On Wednesday, the Fed announced that is was raising its benchmark borrowing rate by another quarter-point after pausing in June for the first time in more than a year. Fed Chair Jerome Powell gave no hint as to what officials might do at future meetings.
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