Despite still high inflation and repeated jitters over the banking sector, in the second quarter of 2023 the U.S. domestic economy grew substantially. GDP growth rate exceeded expectations, jumping at an annual rate of 3.3%. That’s according to the US Bureau of Economic Analysis (BEA), which had released this figure on Thursday. It represents a downward revision from the original forecast of 3%. The upwardly revised growth rate blew past market expectations, which had forecasted a more conservative 3.1% rise.
In short, the BEA’s positive press release emphasizes a significant upward revision of GDP growth. Together, this amendment is indicative of the rising tide of investment and consumer spending. Overall, the revision is a big deal, reflecting a more vigorous economic performance, one that’s better than we had even realized. The BEA recently reported that real GDP experienced an upward revision of 0.3 percentage points from the advance estimate. Nearly all of this growth comes from strong investment and consumers spending more, but the growth was partially offset by falling government spending and an increase in imports.
This growth period is an economic miracle for the US economy, given its resilience against banking crises, fiscal cliffs, inflationary pressures and geopolitical turmoil. Strong economic fundamentals are providing a calm assurance to both investors and policymakers. Their forecasts imply we will begin to see that momentum as we enter the second half of the year.
Better-than-expected GDP growth 3% helped to provide a soft landing in the US Dollar Index on Friday. At the time of the release, the overall index had already dropped 0.2% to 98.00. In addition, this recovery speaks to the market’s positive reaction to increasingly better economic data, which usually increases confidence in the U.S. currency.
The BEA’s announcement is a significant step forward in measuring the true state of the economy. The updates highlight a more favorable economic picture, one sure underpinned by consumer spending and business investment.