'Remarkably robust' US economy grows 2.4%

investmentweek.co.uk:

'As long as the labour market remains tight and inflation remains above the central bank’s 2% target, we can expect to see further rate increases in coming months.'

The surprisingly high figure came despite the continuation of the Federal Reserve's rate rising campaign, which yesterday (26 July) saw an increase of a 25bps to the highest levels seen in 22 years.

US interest rates hit highest levels in 22 years

Today's (27 July) data marked a rebound from the 2% growth rate measured during Q1 2023, and was well above economists' expectations of a 1.8% rise in GDP.

The Department's Bureau of Economic Analysis, which describes GDP data as one of the three most influential economic measures that affect US financial markets, said the increase was the result of a number of factors.

These included increases in consumer spending, non-residential fixed investment, state and local government spending, private inventory investment, and federal government spending that were partly offset by decreases in exports and residential fixed investment.

Meanwhile, the price index for gross domestic purchases increased by 1.9% in the second quarter, compared with an increase of 3.8% during the previous three months.

David Henry, investment manager at Quilter Cheviot said: «Just as the Federal Reserve thought it could take an extended pause with its rate hikes, the latest US GDP figure for the second quarter comes along and muddies the waters.»

He highlighted the robustness of the US economy in the face of the highest interest rates for decades and that it shows no sign of slowing down.

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«The Federal Reserve has always been clear that if the economy can handle more rate rises then it will