US economy grew at 2.8 percent rate in second quarter, blowing past expectations

The U.S. economy grew at an annualized rate of 2.8 percent in the second quarter of 2024, according to new Commerce Department data released Thursday. 

Economists had expected gross domestic product (GDP) to grow by 1.9 percent in the three-month period between April and June, closer to the 1.4 percent growth posted in the first quarter of the year. 

The strong report comes as the Federal Reserve is set to meet next week to consider changing interest rates, which it has held steady since last July.

The central bank has kept rates at a two-decade high, as inflation has remained stubbornly above the Fed’s target of 2 percent.

Inflation has improved significantly since peaking at a 40-year high of 9.1 percent in June 2022. However, several higher-than-expected inflation readings in the first quarter delayed hopes of rate cuts.

More recent inflation readings have reignited hopes of imminent rate cuts. Consumer prices fell for the first time since the pandemic in June, dipping 0.1 percent. The consumer price index (CPI) was up 3 percent year-over-year, down from 3.3 percent in May.

The labor market, which has remained surprisingly strong over the past two years, is also showing signs of cooling, increasing the potential for rate cuts.

While the June jobs report showed a solid 206,000 jobs added last month, the Labor Department made significant downward revisions to April and May’s jobs gains, totaling 110,000 jobs fewer than initially reported. The unemployment rate also ticked up to 4.1 percent in June.

Updated at 9:25 a.m. ET.