U.S. Economy Stronger Than Reported Through Second Quarter As Spending Rose

Core Insights - The U.S. economy experienced a significant upward revision in GDP growth for the second quarter, now reported at an annual rate of 3.8%, compared to earlier estimates of 3.3% and 3% [1][2] - This growth was primarily driven by a notable acceleration in consumer spending, with real final sales to domestic purchasers increasing by 2.9%, surpassing previous estimates of 1.9% [2] - The revised data indicates a strong rebound from a decline of 0.5% in the first quarter, marking the weakest economic growth period since 2022 [3] Economic Indicators - Jobless claims decreased to 218,000 from 232,000, which is significantly lower than the Dow Jones consensus of 235,000 [4] - The Federal Reserve of Atlanta projects a real GDP growth rate of 3.3% for the third quarter, slightly downgraded from an earlier estimate of 3.4% due to decreased residential investment growth [6] Analyst Reactions - Analysts noted the nearly 1% increase in GDP growth as "notable and outside the norm," especially in a year characterized by volatility and mixed economic signals [5] - Positive sentiment was expressed regarding the economy's performance, with stronger-than-expected jobless claims and retail sales [5] Consumer Sentiment and Inflation - Recent consumer sentiment has shown increased pessimism, with a decline reported in September, amid rising inflation and a weakening job market [8] - The upcoming release of personal consumption expenditures (PCE) price index data is anticipated, with expectations of annual inflation reaching 3% in August [7]