U.S. economy grew at 2.8% rate in second quarter, higher than expected

July 25 (UPI) -- The American economy grew by more than expected in the second quarter of 2024 despite interest rates remaining high.

Real gross domestic product, or GDP, rose at a 2.8% rate in the second quarter, according to the "advance" estimate released by the U.S. Bureau of Economic Analysis."

The BEA said the increase in economic growth "primarily reflected increases in consumer spending, private inventory investment, and nonresidential fixed investment."

Both goods and services consumer spending were up.

Economists surveyed by Dow Jones had expected real GDP second-quarter growth to be 2.1%, but the consumer spending in the quarter drove growth higher.

Motor vehicles and parts, recreational goods and vehicles, furnishings and durable household equipment as well as gasoline and other energy goods all increased.

On the services side, healthcare, housing and utilities and recreation services saw increases.

The second quarter results eclipsed the first quarter real GDP number of 1.3%. According to the BEA, the deceleration of first-quarter economic growth was driven by "decelerations in consumer spending, exports, and state and local government spending and a downturn in federal government spending."

Stocks fell on the first quarter news, at one point dropping by 629 points on April 25. Expectations of Dow Jones economists were 2.4% for the first quarter, more than a full point higher than the first quarter's growth.

"Compared to the first quarter, the acceleration in real GDP in the second quarter primarily reflected an upturn in private inventory investment and an acceleration in consumer spending. These movements were partly offset by a downturn in residential fixed investment," the BEA's Thursday statement said.

For the second quarter personal income increased by $237.6 billion, lower than the $396.8 billion increased in the first quarter.

Disposable income in the second quarter was up 3.6%, or $186.3 billion.

Personal saving hit $720.5 billion for the second quarter, compared with $777.3 billion in the first quarter of 2024.

President Joe Biden touted his administration's economic efforts in a statement on the GDP results but said that there was still "more to do."

"Over the next six months, I will continue doing my job as president: lowering costs for hardworking families and growing our economy," he said.