The U.S. economy is expected to have maintained steady growth during the second quarter, supported by stronger consumer spending and continued business investment in AI-related infrastructure, according to economists ahead of the Commerce Department’s GDP report.
Economists surveyed forecast that the U.S. economy grew at an annualized rate of 2.1%, matching the pace recorded in the first quarter. However, some estimates range from 0.8% to 2.9%, with a few analysts lowering their forecasts after recent economic data pointed to weaker trade activity.
Consumer spending, which accounts for more than 2/3 of U.S. economic activity, is expected to have accelerated after growing just 0.5% in the previous quarter. Higher tax refunds issued this year and rising asset values have helped support household spending despite higher fuel prices linked to the ongoing Middle East conflict.
The continued boom in artificial intelligence has also driven another quarter of strong business investment in equipment, with companies expanding AI infrastructure despite concerns over high technology valuations. However, investment in factories and other business structures is expected to have declined for a 10th consecutive quarter.
Economists warned that several factors could slow growth in the second half of the year. Rising gasoline prices, inflation, and lower household savings may reduce consumer spending as temporary financial support fades. The U.S. personal saving rate is currently around 3.0%, close to a 4-year low.
Some analysts expect the saving rate to rise to 3.5% by the end of the year as households become more cautious.
The Federal Reserve kept its benchmark interest rate unchanged at 3.50%-3.75%, although 3 members of its policy committee supported a 0.25% rate increase. Many economists expect the Fed to raise interest rates as early as September to address inflation.
Meanwhile, residential investment, including homebuilding and home sales, is expected to decline for a 6th straight quarter. Defense spending is also expected to remain largely unchanged, with economists suggesting that military operations have had only a limited impact on overall economic activity.
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