Consumer spending rose 3.2% in Q2, the strongest pace since late 2021, powering GDP growth of 1.5% as the economy absorbed the drag from the Iran war and rising gasoline prices.
Alpha Score of 40 reflects weak overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
The U.S. economy grew at a 1.5% annualized rate in the second quarter, the Commerce Department said Thursday, as consumer spending accelerated enough to offset the drag from the Iran war on business investment and exports.
The print was down from 2.1% in the first quarter but landed above the lowest forecasts. Consumer spending rose 3.2%, the strongest quarterly pace since late 2021, driven by prescription drugs, new light trucks, furniture, restaurant meals, and portfolio-management fees, the Bureau of Economic Analysis said.
"Beneath the softer GDP headline, domestic demand remained resilient," Eliza Winger of Bloomberg Economics said. "Consumer spending rebounded strongly – easing concerns about a consumer-led slowdown – even as gasoline prices surged during much of the quarter."
First-quarter growth had been powered by consumer spending, business investment, and exports, partially offset by lower government outlays and higher imports. The second-quarter deceleration reflected a downturn in government spending and slower investment and export growth, the BEA said.
Tax refunds from the first quarter, rising asset prices, the FIFA World Cup, and nonprofit spending tied to the midterm elections all supported the consumer side, according to Reuters.
Business investment in equipment remained solid and broadened beyond AI-related spending, Winger noted. The economy "largely weathered" the war's impact, Reuters reported, though renewed hostilities have created elevated risk for the rest of the year.
The July PYMNTS Consumer Expectations Index rose to 55.6 from the prior month, driven by a 4.1-point jump in household views of the U.S. macroeconomic and buying climate.
The S&P 500 opened higher on the data. The 10-year Treasury yield held near 4.20%.
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