U.S. economic activity in the second quarter was much stronger than expected, according to a preliminary estimate from the Commerce Department on Thursday.

The initial value of the annualized quarterly rate of real GDP in the second quarter of the United States was 2.8%, far higher than the expected 2% and the previous value was 1.40%. The initial value of the annualized quarterly rate of the core PCE price index in the second quarter of the United States was 2.9%, exceeding the expected 2.7% and cooling down from the previous value of 3.7%. The initial value of the quarterly rate of real personal consumption expenditures in the second quarter of the United States was 2.3%, also higher than the expected 2% and the previous value was 1.5%.

After the data was released, the US dollar index rose 18 points in the short term, now at 104.39. Spot gold fell by $9 in the short term, once returning to below the $2,370 mark. Spot silver's decline once widened to 5%. Non-US currencies fell collectively, with the US dollar rising 100 points against the Japanese yen in the short term; the euro fell 20 points against the US dollar in the short term.

The growth in U.S. real GDP in the second quarter mainly reflected growth in consumer spending, private inventory investment, and nonresidential fixed investment.

The increase in consumer spending reflected growth in both services and goods. Among services, the largest contributors were health care, housing and utilities, and recreational services. Among goods, the largest contributors were motor vehicles and parts, recreational goods and vehicles, furniture and durable household equipment, and gasoline and other energy products. The increase in private inventory investment reflected primarily growth in wholesale trade and retail trade, which was partially offset by decreases in mining, utilities, and construction. In nonresidential fixed investment, growth in equipment and intellectual property products was partially offset by a decrease in structural investment. The increase in imports was led primarily by capital goods, excluding motor vehicles.

According to the Wall Street Journal, although by many measures the U.S. economy is still doing well despite high interest rates and inflation has slowed, many Americans are unhappy that groceries, cars and homes are much more expensive than they were a few years ago. Although recession forecasts have faded, there are still signs of weakness in the economy, with the job market beginning to slow, with employers adding jobs at a slower pace in the second quarter than in the first quarter. Consumers are also facing increasing headwinds from still-high borrowing costs.

Institutional analysis points out that although the US economic growth rate has accelerated compared with the first quarter, it is still slower than last year. Under the weight of high interest rates, consumer spending and broader economic activities have cooled, which also helps to gradually curb inflation. This is a good sign for the Federal Reserve, as it is trying to give the economy a soft landing and may start cutting interest rates in September. However, how to cool the labor market without leaving millions of people unemployed is a delicate balance, especially when the unemployment rate has risen for three consecutive months.

Interest rate futures continue to price in bets that the Fed will begin cutting rates in September, with rate cuts expected at every remaining meeting through 2024.

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The article is forwarded from: Jinshi Data