The US economy grew at 2.1 percent annual pace in the second quarter, as against an initial estimate of 2.4 percent growth, according to official revised estimates released on Wednesday, August 30.

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GDP, the sum of all goods and services activity, was less than expected in the second quarter of this year. GDP rose at a 2 percent pace in the first quarter.

The US economy expanded by just 2.1 percent between April and June 2023 as more moderate business investment than initially reported outweighed stronger consumer spending.

The government had previously estimated that the economy expanded at a 2.4 percent annual rate last quarter.

"The updated estimates primarily reflected downward revisions to private inventory investment and non-residential fixed investment," a statement from the Bureau of Economic Analysis read.

The downward revision to GDP reflected less inventory and nonresidential fixed investment. Household spending, the engine of the US economy was revised higher, to a 1.7 percent pace.

Excluding housing, business investment grew at a strong 6.1 percent annual rate in the April to June quarter. Investment in housing, hurt by higher mortgage rates, fell in the second quarter.

Though the economy has been slowed by the US Federal Reserve’s strenuous drive to curtail inflation with interest rate hikes, it has managed to keep expanding, with employers still hiring and consumers still spending.

Meanwhile, stock futures climbed higher, putting Wall Street on track to build on a three-day winning streak.

Futures tied to the Dow Jones Industrial Average surged 22 points, or 0.06 percent. S&P 500 futures and Nasdaq 100 futures traded just above the flatline.

On Tuesday, the three major indexes gained after the release of disappointing consumer confidence figures and a bigger-than-forecast drop in US job openings last month. This sparked hope among traders that the US Fed might lighten its policy stance sometime soon.

Tuesday’s “move goes back to a ‘bad news is good news’ type environment, which tends to be the case when investors are worried about rates and Fed policy,” Sonu Varghese, global macro strategist at Carson Group told CNBC. “Any softness in economic data results in less upward pressure on yields, and that helps equities.”

Despite the gains, the major US stock benchmarks remain on pace for losses this month with just two trading days left. The Nasdaq Composite is poised to end August 2.8 percent lower, while the Dow Jones and S&P 500 are both slated for dip of around 2 percent.

First Published:Aug 30, 2023 6:24 PM IST