Nearly everybody is talking about a recession. Everything will collapse they say. Let me tell you what recession is. It is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
The U.S. economy is far from a recession. Not even near.
The U.S. economy grew at an annualized rate of 3,0% in the second quarter of 2024. This robust growth exceeded earlier estimates of around 2,4%. The key drivers behind this stronger-than-expected growth were increases in consumer spending, particularly on durable goods, and services, and business investments in equipment, and structures. Additionally, private inventory investment provided a significant boost to GDP.
While the growth is positive, it`s not without some areas of weakness. This 3,0% growth signals resilience in the U.S. economy despite challenges such as elevated interest rates, and inflation, which have been moderating but still present pressures on households purchasing power. Residential fixed investment, which includes housing construction, continued to decline.
The growth in Q2 reflects a strong performance compared to previous quarters, suggesting that the U.S. economy is in a relatively healthy state in 2024. So, while growth is solid, there are still headwinds related to inflation and specific sectors of the economy like housing.
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