Financial Mirror (Cyprus)

U.S. consumers keep spending in defiance of inflation


The U.S. Bureau of Economic Analysis released its third and final estimate of second-quarter GDP on Thursday, confirming that the U.S. economy contracted for the second consecutiv­e quarter amid an environmen­t awash in global crises and uncertaint­ies. Real GDP declined at an annual rate of 0.6% in the second quarter, up from a 1.6% decline in the first quarter.

Consumer spending, by far the largest component of the gross domestic product, once again proved to be surprising­ly resilient in the face of surging inflation. According to the BEA, inflation-adjusted personal consumptio­n expenditur­es increased at an annual rate of 2% in the second quarter, partly offsetting a 14% decline in gross private domestic investment. Measured in chained 2012 dollars, real personal consumptio­n expenditur­es amounted to $14.1 trillion on an annualized basis in Q2 2022, up from $13.8 trillion a year earlier.

While consumers kept spending despite rising prices through the second quarter, there are some warning signs as spending on goods, led by food and beverages, declined for the second consecutiv­e quarter. Meanwhile services spending increased at an annual rate of 4.6% in Q2, as Americans spent more on food services and accommodat­ion compared to the preceding quarter. (Statista)*

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