The US Q2 2024 GDP increased by 2.8%. Let's break it down to see what had changed from Q1.
GDP = Government spending + Investment + Consumption + Net Export
Q2 GDP (1st estimate) = 0.53 + 1.46 + 1.57 + (-0.72) = 2.84 (2.8)
We can see that Q2 GDP has improved compared to Q1 GDP with 3 components (G, I & C) increasing and 1 component (NE) decreasing.
The Q2 Core PCE had also decreased to 2.9% which meant that US inflation was declining which was favourable for a rate cut in 2024.
However, the durable goods order excluding defence declined by 7% in June 2024 which meant that consumers were cutting back on big ticket items such as cars, houses, home appliances, etc. If this decline continues, the Q3 GDP is likely to be lower than Q2.
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