U.S. economy grew a solid 2.2% in the second quarter, government says, upgrading previous estimate

The U.S. economy expanded by 2.2% in the second quarter of 2023, according to the Commerce Department, marking an upgrade from the previous estimate of 1.5%. This solid growth came as consumer spending and business investment both performed well. Consumer spending, which makes up about 70% of U.S. economic activity, rose by 3.8% on an annual basis, up sharply from 0.7% in the previous quarter.

However, the growth in GDP was tempered by an increase in imports, which surged by 12.6% annually. This rise in imports, primarily driven by a surge in AI-related product shipments including computer chips, reduced the growth number by nearly 1.7 percentage points. Business investment, excluding housing, grew at a robust 9% rate, reflecting a surge in AI-related investments.

Furthermore, a measure of the economy's underlying strength, which excludes volatile factors like government spending and trade, expanded at a commendable 4.6% pace, up from 1.8% in the first quarter. Housing investment, which had been languishing due to high mortgage rates, also saw a 2.8% increase, marking the first uptick since late 2024.

The GDP growth figures were the final estimates released by the Commerce Department, with the next set of figures for third-quarter growth expected on October 29th.