The pace of US economic growth accelerated in the last quarter, remaining unexpectedly resilient in the face of high interest rates and persistent inflation.
Gross domestic product (GDP) – a broad measure of economic health – rose 2.8% in three months to June, the commerce department reported on Thursday, ahead of economists’ expectations and up sharply from 1.4% in the first quarter.
It comes as the presidential election campaign heightens scrutiny of the US economy.
While Joe Biden touted the “strongest economy in the world” as he announced his withdrawal from the race on Sunday, Donald Trump – who is running to replace him in the White House – has accused Biden of weakening the economy.
In a statement, Biden said: “When I took office, we were in the midst of the worst economic crisis since the Great Depression. Today’s GDP report makes clear we now have the strongest economy in the world.”
Biden said there was “more to do” over the final six months of his term. “The vice-president and I will keep fighting for America’s future – a future of promise and possibilities, of ordinary Americans doing extraordinary things,” he said.
Despite relatively rosy economic figures, nearly three in five Americans wrongly believe the US is in recession, and the majority blame the Biden administration, according to a Harris poll conducted for the Guardian in May.
Policymakers at the Federal Reserve scrambled to bring down inflation from its highest level in a generation, raising interest rates to a two-decade high. They are now considering when to start cutting rates, amid early signs that price growth is falling back towards the Fed’s 2% target.
“This is a perfect report for the Fed,” Olu Sonola, head of economic research at Fitch Ratings, said of Thursday’s GDP numbers. “Growth during the first half of the year is not too hot, inflation continues to cool and the elusive soft landing scenario looks within reach.”
Economists had expected GDP growth of about 2% in the second quarter. Some have questioned how the US economy will fare later this year as high rates take their toll.
“We expect a slowdown from here,” economists at Pantheon Macroeconomics told clients earlier this week, “driven by the mounting pressure from high interest rates, which likely are only now starting to exert their full impact on the real economy, given the long lags involved.”
Associated Press contributed reporting