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Recovery and Growth Insights Dashboard
As the economy’s momentum continues, inflation cools and consumers feel more confident, the risk of recession is decreasing.
Adjusted for inflation, GDP expanded at a 2.4% annual rate in Q2. Second quarter GDP growth was largely driven by consumer spending on services.
And based on a recent survey of business managers, the economy expanded in July as service activity continued to grow.
Despite a drawdown in excess savings, a strong labor market and continued wage growth supports consumer spending, alongside slowing inflation. Incomes are rising faster than prices.
Moderating inflation is boosting consumer confidence, real disposable income and driving down travel prices resulting in consumers continuing to spend. Yet, consumers are becoming somewhat more thoughtful about their purchases resulting in weaker retail sales growth.
While the economy continues to expand, it is slowing. The tide is expected to shift later in the year, as the labor market loses momentum, savings are diminished and interest rates stay relatively elevated.
Still, the possibility of a soft landing for the U.S. economy increases as inflation begins to cool.
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