RBC Chief Economist Frances Donald talks about the reserves of the FED Reserves Rate determination and the monetary policy to make money.
The US economy accelerated in the second quarter when the Commerce department released its second revision of the growth of the Real Gross Interior Product (BDP) for the last quarter.
The Bureau of Economic Analysis (BEA) released its third and definitive estimate of the second quarter of the GDP on Thursday, which showed that the economy grew by 3.8% in the period from April to June.
That figure was hotter than the estimate of 3.3% of economists who were interrogated by LSEG, and was higher than the initial GDP estimate of the second quarter of 3%.
Bea explained that in the second quarter, the GDP “mainly reflected a decrease in import, which were a substraction in the calculation of GDP and an increase in consumer expenses. These movements were partially compensated by purchasing investments and exports”.
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The American economy grew faster than expected in the second quarter. (David L. Ryan / The Boston Globe Via Getty Images / Getty Images)
The revision of the growth of the second quarter up by 0.5 percentage points compared to the second estimate of the BEA was mainly due to higher consumer expenditure than previously reported.
The agency explained that consumer spending was revised to services and was partially compensated by a downward revision of goods purchasing. The largest contributors to the expenditure for services were transport, financial services and insurance. The most important contributors to goods issues were motor vehicles and parts.
Inspector of the Labor Department General Audit Audit of BLS Gata collection challenges
Economic growth In the first quarter, a contraction of 0.5% to 0.6% was revised. (Emily Elconin / Bloomberg via Getty Images / Getty images)
The real final turnover to private domestic buyers, which is the sum of consumer expenditure and gross, private investments, was revised by 1 percentage point in the second quarter to a profit of 2.9%.
The growth in the second quarter follows a GDP sample in the first quarter to be revised down from a contraction of 0.5%to 0.6%, which leaves the GDP growth in the first half of 2025 with an annual percentage of approximately 1.6%.
Bea attributed the revival in the second quarter to a decrease in import and an acceleration of consumer expenditure, which were partially compensated by a decrease in the investment.
Inflation remained stubbornly high in August, because Fed weighs the tariff reductions
Rates are taxes on imported goods paid by the importer, which usually pass on the higher costs to consumers through higher prices. (Jesus Olarte / Anadolu via getty images / getty images)
The revisions of GDP are among the concern about the economy in the midst of signs of a delaying labor market and persistent inflation above the target interest of 2% of the Federal Reserve.
“Although these GDP revisions look back, they paint a somewhat reassuring picture of the American economy. In particular, personal consumption is higher, so that more credibility is given to the idea that consumers remain resilient,” said Etoro US Investment Analyst Bret Kenwell.
“Despite today’s solid GDP results, this week’s most important focus is on tomorrow’s PCE report. Active investors will want to see an in-line or lower inflation result, so that the FED will keep two interest rate letings in 2025,” Kenwell added. “Although inflation and employment reports are a highest focus for investors, they will take a closer look at even more in the coming months.”
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Markets expect the Federal Reserve to improve with two 25-base-Point interest rate letters this year, after reducing that size during last week’s meeting.
Policy makers will take a look at the Fed’s favorite inflation meter, the Index Personal Consumption Expenditures (PCE), for the month of August when it will be released tomorrow, while the September report report will be released next Friday.
