Economic growth in the U.S. accelerated in the second quarter as activity remained largely resilient in the face of an aggressive bout of Federal Reserve policy tightening.
The world’s biggest economy expanded by 2.4% on an annual basis in the April to June period, according to preliminary data from the Commerce Department on Thursday. Economists had called for growth of 1.8%.
The reading picked up the pace from 2.0% in the first three months of the year, which was down from 2.6% in the fourth quarter of 2022.
It comes a day after the Fed hiked interest rates by 25 basis points to their highest level in more than two decades. The decision was the latest step in the Fed’s unprecedented policy-tightening campaign aimed at corralling elevated inflation. Rates stood at near zero as recently as March 2022.
Fed Chair Jerome Powell left the door open for another increase in September but markets are only pricing in a 20% chance of a similarly sized jump at that meeting.
Inflation has begun to descend from a peak of over 9% reached in June 2022, while consumer spending has remained strong. The labor market has also stayed robust, with separate data on Thursday showing that the number of Americans filing new claims for unemployment benefits unexpectedly fell last week to 221,000.
The trends have helped to fuel hopes for a so-called “soft landing,” in which the U.S. manages to quell inflation without causing a major meltdown in the wider economy.