The U.S. economic output experienced stronger-than-expected expansion in the second quarter of the year, highlighting the resilience that has long characterized the economy despite the burden of high interest rates.

The annualized growth rate of the real gross domestic product (GDP) was 2.8% in the second quarter, marking a robust acceleration from the 1.4% growth seen in the first quarter of 2024, according to the advance reading Thursday from the Bureau of Economic Analysis.

Q2 GDP Report Key Highlights

The 2.8% growth rate positively surprised economist expectations of a 2% growth, as tracked by Tradingeconomics.

The Personal Consumption Expenditure (PCE) price index slowed from 3.4% in the first quarter to 2.6% in the second quarter, indicating falling price pressures.

The Core PCE price index, which excludes energy and food items, eased from 3.7% in the first quarter to 2.9% in the quarter ending June, above the expected 2.6%.

The acceleration in real GDP in the second quarter primarily reflected an upturn in private inventory investment and an acceleration in consumer spending.

Looking at the major contributions to growth, consumer spending grew at 2.3% annualized rate, accelerating from 1.5% in the previous quarter.

Weekly Unemployment Claims Report

Simultaneously, the Labor Department reported a drop in weekly unemployment claims for the week ending July 20. Initial claims fell from 245,000 to 235,000, below the predicted decline to 238,000.

The four-week average of weekly jobless claims — which smooths out week-on-week volatility — held broadly steady.

Continuing claims inched down from 1.86 million to 1.851 million.

Market Reactions

The U.S. dollar index, as tracked by the Invesco DB USD Index Bullish Fund ETF , rose 0.1% minutes after the economic data releases Thursday.

Prior to the data, markets had assigned a full likelihood of Fed interest rate cut in September.

Futures on major U.S. indices trimmed losses after the GDP data. Contracts on the Nasdaq 100 were flat by 8:36 a.m. ET, while those on the S&P 500 were 0.1% higher.

On Wednesday, the tech-heavy index, as tracked by the Invesco QQQ Trust suffered its worst day since October 2022.

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