The U.S. economy grew 1.5% in the second quarter, unchanged from the initial estimate, as stronger consumer spending and business investment outweighed a 1% drop in government outlays, according to the Bureau of Economic Analysis.
Real consumer spending rose 3.4% in Q2, lifted by seasonal events such as the FIFA World Cup and Amazon Prime Day, while July personal spending increased 0.2% after a 0.3% gain in June, beating the 0.1% consensus forecast.
Personal income jumped 0.4% in July, double May’s 0.2% rise, driven by higher wages, asset receipts and government transfers.
The personal savings rate climbed to 3% of disposable income, and capital investment surged 9% for the sixth consecutive quarter, with imports revised up to 12.5% of GDP.
Inflation remained elevated, with the GDP price index climbing to 6.4% as war‑driven energy costs pushed input prices higher, though early signs suggest a slowdown as oil and gas markets stabilize.
Eyes on 3rd Quarter GDP
The Atlanta Federal Reserve’s GDPNow model projects a 4% expansion for July‑September, citing robust consumer spending, inventory adjustments and business investment, while the New York Fed’s Nowcast estimates a more modest 2.3% growth.
Companies have accelerated capital spending this year, especially on AI infrastructure, as hyperscalers such as Alphabet, Amazon, Meta and Microsoft plan up to $1 trillion in capex, with analysts expecting another trillion dollars in spending next year.
“We’re seeing extremely strong demand for the ultimate AI use case and its return on investment,” Evan Schlossman, principal at Neostellar, wrote in an emailed note to The Epoch Times.
July retail sales slipped unexpectedly, indicating consumer caution, and the Conference Board’s August consumer confidence index fell for a second month, reflecting growing pessimism about business conditions and the labor market.
“Consumers are optimistic about today but increasingly nervous about tomorrow,” Jeffrey Roach, chief economist at LPL Financial, noted in an emailed statement.
Spending could bounce back in the August and September numbers as many Americans participate in the busy back-to-school shopping season.
A National Retail Federation report found that 62 percent of U.S. consumers began their back-to-school shopping last month, with the trade group forecasting total spending will be close to $147 billion this year.
Falling crude oil prices, down another 2% this week, could lower gasoline costs; the national average stood at $4.10 per gallon on Aug. 26, according to the American Automobile Association.
