GDP, the sum of all goods and services activity, increased at a 2.4% annualized rate for the April-through-June period. Consumer spending powered the solid quarter, aided by increases in nonresidential fixed investment, government spending and inventory growth.
Consumer spending, as gauged by the department’s personal consumption expenditures index, increased 1.6% and accounted for 68% of all economic activity during the quarter. That did market a pullback from the 4.2% increase in the first quarter but still showed resiliency amid higher interest rates and persistent inflation.
Gross private domestic investment increased by 5.7% after tumbling 11.9% in the first quarter. A 10.8% surge in equipment and a 9.7% increase in structures helped power that gain.
Still, signs of trouble persist.
Markets have been betting on a recession, pushing the 2-year Treasury yield well above that for the 10-year note. That phenomenon, called an inverted yield curve, has a near-perfect record for indicating a recession in the next 12 months.
Similarly, the inversion of the 3-month and 10-year curve is pointing to a 67% chance of contraction as of the end of June, according to a New York Fed gauge.