Economic growth in the US has accelerated more than expected. Now all eyes are on the Federal Reserve Bank.
The US economy continued to be robust in the spring. In the second quarter, gross domestic product (GDP) rose by an annualized 2.8 percent compared to the previous quarter, according to an initial estimate by the Department of Commerce in Washington. Economists had expected growth of 2.0 percent. In the first quarter, the world’s largest economy grew by 1.4 percent.
Private consumption remained an important pillar of growth. “The world’s largest economy currently seems to be immune to global economic problems,” writes Thomas Gitzel, chief economist at VP Bank. “While Europe is suffering from the weak development of the global manufacturing sector, the US economy is countering this with its strong domestic consumption.”
The financial markets are now looking to the US Federal Reserve, which is holding its next meeting next week. An interest rate cut is still expected for September. “The Fed can continue to hope that it has managed the feat of a soft landing for the US economy,” write the economists at Commerzbank. “If inflation now returns to the target value of 2 percent, the Goldilocks scenario is perfect.” This describes the state of robust economic growth and low inflation.
US growth figures are annualized, i.e. extrapolated over the year. They indicate how much the economy would grow if the pace continued for a year. This method is not used in Europe, which is why the figures are not directly comparable. To arrive at a growth rate comparable to Europe, the US rate would have to be divided by four.
Source: Stern
