The US second-quarter GDP data will be released tonight, with consumer spending and inventory expected to drive accelerated economic growth

According to the Wise Finance APP, driven by strong consumer spending and inventory buildup, the US economic growth may accelerate in the second quarter, but the pace of US economic expansion is not expected to affect the market's expectation of a rate cut by the Federal Reserve in September.

The US Department of Commerce will release second-quarter GDP data tonight. The current market expectation is that the initial annualized quarterly real GDP growth rate for the second quarter of the United States is 2%, higher than the previous value of 1.4%. At the same time, the market expects the initial annualized quarterly core PCE price index for the second quarter of the United States to drop to 2.7% - this will be good news for Federal Reserve officials before the two-day policy meeting next week.

Despite the significant rate hikes by the Federal Reserve in 2022 and 2023, the performance of the US economy still shows resilience. Despite the unemployment rate rising to a two-and-a-half-year high of 4.1%, the flexibility of the labor market continues to support the US economy. Brian Bethune, an economics professor at Boston College, said, "The expansion of the US economy fits the 'golden-haired girl' scenario, that is, economic growth is slowing down and inflation is decreasing." "Consumer spending is driving economic growth."

It is reported that consumer spending accounts for more than two-thirds of the total US economy. The current market expectation is that the initial annualized quarterly consumer spending for the second quarter of the United States will reach 2%, higher than the previous value of 1.5%. In addition, economists estimate that as businesses accumulate more inventory, this may contribute at least one percentage point to GDP growth - which has dragged down GDP growth for two consecutive quarters. Business equipment spending is also expected to accelerate in the second quarter after a moderate increase in the first quarter. Government spending may also contribute to economic growth.

However, due to slowing global demand and a stronger US dollar, the trade deficit may drag down US economic growth. Pantheon Macroeconomics estimates that the drag of the trade deficit on US GDP growth could be as high as 1.4 percentage points, the highest level in over two years.

The surge in mortgage rates in the spring may disrupt the recovery of the real estate market, with residential investment (including home construction and sales) expected to contract after achieving double-digit growth in the first quarter.

Although US economic growth is expected to rebound, the outlook for the second half of this year remains uncertain as signs of a slowdown in the labor market could affect wage growth and further impact consumer spending. In addition, the savings rate of Americans is much lower than the pre-pandemic average level. Economists estimate that most of the effects of the Federal Reserve's rate hikes will still be felt; state and local government revenues are also slowing, which could lead to cuts in government spending.

Ian Shepherdson, Chief Economist at Pantheon Macroeconomics, said, "Historically, changes in borrowing costs for small and medium-sized businesses take about two years to restrain GDP growth, indicating that most of the impact of the Federal Reserve's rate hike cycle is still ahead, as the Federal Reserve's rate hike cycle ended only 12 months ago." "We expect US GDP growth in the second half of the year to slow to the range of 1.0% to 1.5%."