The U.S economy grew at the strongest pace in nearly four-years during Q2, supported by a rebound in consumer spending, exports and firm business investment.
Q2 GDP rose at a seasonally and inflation-adjusted annual rate of +4.1% – a pickup from Q1 growth rate of +2.2%. Compared to the second quarter a year ago, output grew 2.8%.
Note: Market expectations were looking for a +4.4% growth rate.
Today’s report again suggests that the Fed will continue to “gradually” raise short-term interest rates to prevent economic overheating.
The Fed is widely expected to leave its benchmark rate unchanged at its policy meeting next week (Aug. 1) and increase it by +25 bps in September to +2.25%.
Immediate reaction sees some pressure on the U.S dollar.