ICYMI: Bidenomics at Work: Economy Grew at Solid 2.4% Rate Last Quarter

Today's GDP report showed Bidenomics at work: the economy grew at a solid 2.4% rate last quarter while inflation fell significantly. Real personal disposable income increased by 2.5%. Consumer spending increased by 1.6%, thanks to a strong labor market and consumer finances. Business investment increased by nearly 8%, and construction of manufacturing facilities contributed more to growth than it has in 40 years.

According to Bloomberg, "Business spending on structures continued to grow at a breakneck pace, bolstered by recent efforts to shore up domestic factory production. The Biden administration championed a series of bills — the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and CHIPS Act — that provide both direct funding and tax incentives for private companies to invest in areas like semiconductors and electric vehicles."

This latest progress comes at a moment when our unemployment rate remains near record lows, inflation has fallen 12 months in a row, real wages are higher than they were before the pandemic, and the share of working-age Americans with a job is the highest in 20 years. Despite widespread predictions of a recession over the past year, we're now seeing some Wall Street firms directly credit Bidenomics for "much stronger" growth this year.

See coverage below:

Fortune: The economy just won't stop growing—U.S. GDP shot up again in the second quarter
[Paul Weisman/AP, 7/27/23]

The U.S. economy surprisingly accelerated to a 2.4% annual growth rate from April through June, showing continued resilience in the face of steadily higher interest rates resulting from the Federal Reserve's 16-month-long fight to bring down inflation. Thursday's estimate from the Commerce Department indicated that the gross domestic product — the economy's total output of goods and services — picked up from the 2% growth rate in the January-March quarter. Last quarter's expansion was well above the 1.5% annual rate that economists had forecast. […] By any measure, the American job market has shown itself to be remarkably strong. At 3.6% in June, the unemployment rate hovers just above a five-decade low. […] Higher pay and job security are giving Americans the confidence and financial wherewithal to keep shopping.

Insider: The US economy is surging
[Madison Hoff, 7/27/23]

The US economy was seeing growth surge in the second quarter of 2023, according to new data out Thursday morning. According to the Bureau of Economic Analysis, real gross domestic product, or real GDP, grew at an annualized rate of 2.4% in the second quarter of 2023. That beats the 1.8% forecast. This exceeds the 2.0% growth seen in the first quarter of the year and doesn't follow the trend the US has been seeing of slowing economic growth.

Barron's: The Economy Defies Expectations. GDP Surges 2.4%.
[Angela Palumbo, 7/27/23]

The U.S. economy grew at a 2.4% annual rate in the second quarter, according to the first estimate of gross domestic product. It's a surprise pickup from the first quarter's 2% growth and significantly better than economists' projections. […] The Bureau of Economic Analysis said Thursday that increases in consumer spending, nonresidential fixed investment, state and local government spending, private inventory investment, and federal government spending contributed to the increase in second-quarter GDP.

Bloomberg: US Growth Accelerates to 2.4% on Resilient Consumers, Companies
[Reade Pickert, 7/27/23]

"Growth is outpacing expectations even as the monetary policy stance has become restrictive," Rubeela Farooqi, chief US economist at High Frequency Economics, said in a note. "A strong household sector that continues to benefit from positive job growth and rising real incomes should keep growth on a positive trajectory this year." […] Nonresidential fixed investment increased at the fastest pace in more than a year. Business spending on structures continued to grow at a breakneck pace, bolstered by recent efforts to shore up domestic factory production. The Biden administration championed a series of bills — the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and CHIPS Act — that provide both direct funding and tax incentives for private companies to invest in areas like semiconductors and electric vehicles.

Wall Street Journal: U.S. Economic Growth Accelerates, Defying Slowdown Expectations
Economy grew 2.4% last quarter, suggesting the U.S. is steering clear of recession
[Sarah Cambon and Christian Robles, 7/27/23]

Americans are benefiting from a strong labor market in which wage gains recently surpassed cooling inflation. […] Business investment grew at an annual rate of 7.7% in the second quarter, up sharply from 0.6% in the first quarter. Some long-term forces are helping boost investment despite higher interest rates. A surge in federal spending on chip-manufacturing plants and electric-vehicle factories is offsetting some other cutbacks.

ABC: US economic growth accelerated in 2nd quarter, exceeding expectations and rebuking recession fears
A cooldown of inflation and a solid jobs market have fueled growing optimism.
[Max Zahn, 7/27/23]

U.S. economic growth accelerated over three months ending in June, blowing past economist expectations and tamping down concerns about a possible recession. The U.S. gross domestic product grew by a 2.4% annualized rate to finish the first half of 2023, according to government data released Thursday. […] Some key economic indicators, meanwhile, have sustained robust performance. A jobs report earlier this month showed that the labor market cooled, but still grew at a solid clip in June, adding 209,000 jobs. "The U.S. economy has actually been quite resilient," Fed Chair Jerome Powell said late last month in Sentra, Portugal, at a conference organized by the European Central Bank.

MarketWatch: What recession? GDP speeds up to 2.4% in the spring
A resilient U.S. economy grew at a 2.4% annual pace in the second quarter, propelled by steady consumer spending and a rebound in business investment. […] Businesses, another major leg of the economy, ratcheted up fixed investment at a nearly 5% annual pace. That's the biggest increase in six quarters. Investment rose at double-digit rates, in percentage terms, for both equipment and structures. Part of the increase likely stems from a 2021 law passed by the Biden administration that gives subsidies and tax credits to businesses that investment in green energy and technology such as chip making.

Washington Post: U.S. economy grew by annual rate of 2.4 percent in second quarter
Consumer spending on goods and services as well as government spending fueled broader economic growth from April through June.
[Abha Bhattarai, 7/27/23]

The new gross domestic product figures, released Thursday by the Bureau of Economic Analysis, showed the economy expanded for the fourth straight quarter in a row, casting doubt on predictions of a recession this year. […] But the emerging trepidation among consumers is largely being offset by a burst of new spending by the government and businesses. The Biden administration's robust investment in infrastructure projects, for example, including new bridges and roads, airport improvements and manufacturing plants for electric vehicles, appears to be spurring widespread private investments and boosting the overall economy far earlier than many had predicted. […] The Biden administration has so far allocated $225 billion in infrastructure funding toward 35,000 projects across the United States. Private companies have announced another $503 billion in related investments, White House data shows.

USA Today: Economy grew solid 2.4% in second quarter amid easing recession fears
[Paul Davidson, 7/27/23]

Can anything slow the U.S. economy? Despite high interest rates and inflation, the economy grew solidly in the second quarter as a slowdown in consumer spending was offset by a rise in business investment.
The nation's gross domestic product, the value of all goods and services produced in the U.S., expanded at a seasonally adjusted annual rate of 2.4% in the April-June quarter, the Commerce Department said Thursday. That's up from 2% growth early in the year and above the 1.8% rise predicted by economists in a Bloomberg survey. "The latest numbers put an exclamation mark on it: we're not in a recession and it's unlikely we'll slip into one this year or maybe even next year," Robert Frick, an economist at Navy Federal Credit Union, wrote in a note to clients.

CNBC: GDP grew at a 2.4% pace in the second quarter, topping expectations despite recession calls
[Jeff Cox, 7/27/23]

The U.S. economy showed few signs of recession in the second quarter, as gross domestic product grew at a faster-than-expected pace during the period, the Commerce Department reported Thursday. GDP, the sum of all goods and services activity, increased at a 2.4% annualized rate for the April-through-June period, better than the 2% consensus estimate from Dow Jones. GDP rose at a 2% pace in the first quarter.

Yahoo Finance: GDP: US economy grows at a faster pace than expected in Q2
[Josh Schafer, 7/27/23]

The US economy grew at a faster-than-expected pace in the second quarter of 2023, adding to signs that the threat of a recession has faded in the immediate term. The Bureau of Economic Analysis's advance estimate of second quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 2.4% during the period, faster than consensus forecasts. Economists surveyed by Bloomberg had the US economy growing at an annualized pace of 1.8% during the period. The reading came in higher than first quarter GDP, which was revised up to 2%.

Quartz: US GDP growth sped past expectations as business investment surged
US business investment rose by 7.7% in the second quarter, as firms poured money into buildings and equipment as part of their expansion
[Nate DiCamillo, 7/27/23]

Economic growth was strong, in particular, because businesses continued to invest in buildings and equipment that will allow them to manufacture more goods and offer more services. This swell of investment in operations was, in part, driven by corporations trying to front-run the federal government spending that's being funneled to various parts of the US economy. The Inflation Reduction Act, CHIPs Act, and Bipartisan Infrastructure Law, the Biden administration's key legislative achievements, are lending confidence to business leaders. In a way, their influence has been greater than that of the Federal Reserve's cycle of rate hikes, which has made borrowing more expensive for companies.

Reuters: US economic growth accelerates in second quarter; inflation retreats
[Lucia Mutikani, 7/27/23]

Business investment accelerated after almost stalling in the first quarter, thanks to a rebound in spending on equipment like aircraft and motor vehicles. Efforts by President Joe Biden's administration to bring semiconductor manufacturing back to the United States are boosting factory construction. Investment in nonresidential structures like factories remained robust last quarter, contributing to the economy's resilience. Government spending also contributed to GDP growth. There was also a boost from inventory investment, but trade was a drag after adding to growth for four straight quarters.