US Department of Commerce downgrades GDP growth estimate to 2.1% in Q2

The US economy grew in April-June by 2.1% in annual terms, follows from the second, updated estimates Bureau of Economic Analysis (BEA, structure of the country’s Ministry of Commerce).

A month earlier, the Ministry of Commerce estimated US GDP growth at 2.4%. The new estimate reflects a decline in investment in inventory, as well as business spending on equipment and intellectual property products. At the same time, government spending, consumer spending, exports, and housing investment were all upgraded. According to the results of the first quarter, the country’s economy grew by 2%.

How notes Reuters, most economists have abandoned their forecasts that the US economy will enter a recession this year. The agency believes that due to the stability of the economy, the cost of borrowing will remain high for some time, but against the backdrop of a slowdown in inflation, the US Federal Reserve System (FRS) may stop raising the key rate.

Last week, Fed Chairman Jerome Powell declaredthat the regulator will probably have to further raise the key interest rate to curb inflation. The Fed, Powell added, is alert to signs that the economy is cooling “not as expected” and “particularly high” consumer spending.

On July 26, the US Federal Reserve raised its key interest rate by 25 bp. p. – from 5-5.25% to 5.25-5.5% per annum. According to the regulator, the latest figures indicate that economic activity has grown at a moderate pace. Job growth has been robust in recent months, with unemployment low and inflation high.