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

WASHINGTON (AP) — The nation’s economy accelerated last quarter at a strong 2.8% annual pace, with consumers and businesses helping drive growth despite the pressure of continually high interest rates.

Thursday’s report from the Commerce Department said the gross domestic product — the economy’s total output of goods and services — picked up in the April-June quarter after growing at a 1.4% pace in the January-March period. Growth last quarter also picked up because businesses increased their inventories. Economists had expected a weaker 1.9% annual pace of growth.

Despite last quarter’s uptick, the U.S. economy, the world’s largest, has cooled in the face of the highest borrowing rates in decades, engineered by the Federal Reserve to fight high inflation. From mid-2022 through 2023, annualized GDP growth had topped 2% for six straight quarters. In last year’s final two quarters, GDP expanded by robust rates of 4.9% and 3.4%.

The state of the economy has seized Americans’ attention as the presidential campaign has intensified. Although inflation has slowed sharply, to 3% from 9.1% in 2022, prices remain well above their pre-pandemic levels.