US Q2 Growth Rate Raised from 2.8% to 3.0%… Reflecting Strong Consumption: Coin Leaders
The U.S. economic growth in the second quarter of this year was assessed to have been stronger than initially estimated.
The U.S. Department of Commerce announced on the 29th (local time) that the U.S. gross domestic product (GDP) growth rate (preliminary figure) in the second quarter was tallied at 3.0% (annualized rate compared to the previous quarter).
The growth rate was revised upward by 0.2 percentage points from the preliminary estimate (2.8%) announced last month, as it increased compared to the first quarter (1.4%). It also surpassed the expert forecast (2.8%) compiled by Dow Jones.
The Department of Commerce explained the background to the adjustment, saying, “It reflects an upward adjustment of personal consumption compared to the preliminary figure.”
The provisional figure is calculated by additionally reflecting economic activity indicators that were omitted when calculating the preliminary figure.
The personal consumption growth rate in the second quarter was revised upward from the preliminary estimate of 2.3% to 2.9%, and the contribution of personal consumption to the second-quarter growth rate also rose from 1.57 percentage points to 1.95 percentage points.
Despite expert predictions that consumption would slow down due to prolonged high interest rates, slowing wage growth, and depletion of household excess savings, U.S. consumption showed strong resilience in the second quarter.
The growth rate of private spending (final sales to domestic private buyers), which shows the basic trend of demand in the U.S. economy, also rose from the preliminary estimate of 2.6% to 2.9%.
The 3% growth rate for the second quarter exceeds the US potential growth rate, which is estimated to be in the upper 1% range.
Unlike Korea, the United States publishes GDP statistics by converting the growth rate (seasonally adjusted) compared to the previous quarter into an annual growth rate.
Experts have been predicting that U.S. growth will gradually slow as the cumulative effect of rapid rate hikes since 2022 begins to take effect and the effects of earlier fiscal stimulus fade.
However, contrary to expert observations, the U.S. economy is interpreted to have shown robust growth in the second quarter that exceeded expectations, based on solid consumption.
Meanwhile, the inflation index was also revised down slightly from the preliminary estimate. The personal consumption expenditures (PCE) price index rose 2.5% in the second quarter (annualized rate compared to the previous quarter), and the core PCE price index, excluding food and energy, rose 2.8%, both down 0.1 percentage points from the preliminary estimate.
The PCE price index increase rate is a price index that the U.S. Federal Reserve (Fed) uses as a benchmark for monetary policy. The Fed’s target inflation rate is 2%.