US GDP ‘surprises’ in 2024: Higher growth forecast than in Mexico

The growth of the US economy surprised in the second quarter of the year, widely exceeding market expectations, which will allow it to have a greater expansion than the Gross Domestic Product (GDP) of Mexico for the first time in three years.

During the second quarter of the year, the GDP of the United States recorded a growth of 2.8 percent at an annualized quarterly rate, from the 1.4 percent reported in the first quarter, according to the Bureau of Economic Analysis (BEA); in addition, it was above the 2.0 percent estimate of analysts.

“The pause in the economy during the first three months of the year turned out to be temporary and the acceleration of growth in the second quarter should help moderate concerns about the durability of the expansion and calm rumors that the Federal Reserve needs to cut interest rates in July,” said Ryan Sweet, chief economist for the United States at Oxford Economics.

He added that GDP is volatile and subject to major revisions, but the strength of actual final sales to domestic buyers, the engine of the economy, is encouraging.

Craig Fehr, investment strategist at Edward Jones, said that the pace of growth in the US economy should give the Fed confidence that productive activity does not immediately need monetary support.

“Therefore, we believe that this will support the central bank to keep rates stable next week,” he added.

For Banorte analysts, the growth drive continues to be supported by the labor market despite the fact that some signs of less strength are beginning to emerge.

They added that other positive factors are related to the increase in real wages in recent months, largely due to the moderation of inflation; and the increase in salaries in nominal terms.

“Looking ahead, we expect the solidity to continue, but we do anticipate a moderation in the pace due to lower employment dynamism, a reduction in the savings rate, deterioration in consumer confidence and uncertainty in the run-up to the November elections,” they noted.

Source: elfinanciero