The U.S. economy saw growth at a pace of 2.8% in the second quarter of 2024, surpassing expectations of around 2% and doubling the 1.4% rate in the first quarter. This expansion is noteworthy as it indicates a resilient economy, especially in the face of high interest rates and moderating fiscal stimulus. Major factors contributing to this growth include strong consumer spending on both services and durable goods, a sector that makes up roughly two-thirds of the economy. Spending has been bolstered by rising wages, although consumers have been tapping into savings more to support their purchasing, leading to a reduced saving rate of 3.5% compared to pre-pandemic averages​.
Business investment also picked up significantly, with sectors like equipment (notably aircraft) and intellectual property products continuing to see healthy spending. Inventory accumulation, which had previously been a drag on growth, reversed and added to GDP this quarter. However, this economic resilience is juxtaposed with signs of a slight cooling, such as increased unemployment claims and a softening labor market, both anticipated to impact consumer spending and business hiring decisions moving forward​.
As inflation eases and approaches the Federal Reserve’s target, economists expect interest rate cuts by the Fed, possibly beginning in September 2024. The cooling labor market, slower wage growth, and impacts from previous rate hikes are expected to moderate growth in the latter half of the year. Despite the slowdown, economists are cautiously optimistic about a “soft landing,” predicting growth below 2% through mid-2025, aligning with expectations of stabilized demand and moderated economic output as elections approach.​


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