US GDP grows at 2.8% in Q2 as consumer spending remains strong

US GDP grew at a 2.8% annualized rate in Q2, significantly above than the 2% forecasted by market consensus. The resilient growth was supported by acceleration in consumer spending, increase in nonresidential fixed investment as well as an upturn in private inventory investment, according to the Bureau of Economic Analysis.

Consumption is the major driver to economic growth in the quarter, generating a sizable 1.57 percentage points (ppts) of growth. Increase in inventory change contributed another 0.82 ppts while investment contributed 0.64ppts. Net export, dragged by a close to 7% increase in import, is the only expenditures segment that contributed negatively.

Final sales to domestic purchasers, which is the sum of personal consumption expenditures and gross private fixed investment and is a figure that doesn’t subtract the spending on imports, increased 2.6% in Q2, the same rate as in the first quarter and continued to signal strong spending pattern in the US economy.