'Perhaps the surprisingly resilient US economy is finally showing signs of slowing after a long rate hiking cycle.'
The GDP figure came in below expectations, after the bureau previously forecast a 2.4% increase. GDP for Q1, however, was upgraded from 1.1% to 2%.
The increase in GDP in Q2 reflected a rise in consumer spending and non-residential fixed investment, as well as state, local and federal government spending, though was offset by decreases in exports, residential fixed investment and private inventory investment., the agency explained.
US GDP growth drops below expectations to 1.1% in Q1
Ryan Brandham, head of global capital markets, North America at Validus Risk Management, said: «US GDP came in weaker than expected at 2.1% versus expected 2.4%. This is a soft number, and perhaps the surprisingly resilient US economy is finally showing signs of slowing after a long rate hiking cycle.
»This weak figure will support those calling for a Fed pause in September, with more data yet to come before the meeting. We can expect a weaker USD and lower US rates for today's session."
The lower-than-expected GDP figure came after a speech by Fed chair Jerome Powell on 25 August at the Jackson Hole symposium, where he noted US inflation remained too high, although past its peak, and that rates could remain higher for longer.
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