US economic growth increased last quarter to a healthy 2.8% annual rate

The U.S. economy grew at an annual rate of 2.8% in the last quarter, surpassing economists' expectations of 1.9% growth. This acceleration follows a 1.4% growth rate in the previous quarter. The Commerce Department's report indicates that consumer spending, which constitutes about 70% of GDP, rose by 2.3%, up from 1.5% in the earlier quarter. Business investment also increased, particularly in equipment, which saw an 11.6% rise. Despite high interest rates, the economy appears to be on track for a "soft landing," where inflation is controlled without triggering a recession. Inflation rates have eased, with the Federal Reserve's preferred gauge rising at 2.6%, down from 3.4%. Core PCE inflation, excluding food and energy, increased at a 2.9% pace, down from 3.7%. The report suggests that the Fed may soon consider cutting interest rates, which could lower borrowing costs for consumers. The economic landscape has been influenced by previous aggressive rate hikes aimed at curbing inflation, which peaked at 9.1% in 2022. The resilience of consumer spending, supported by a strong job market and accumulated savings, has helped sustain economic growth despite challenges such as rising import levels and supply chain disruptions. Overall, the latest GDP figures reflect a robust economic performance amid ongoing inflationary pressures and high borrowing costs.