US second-quarter GDP revised higher amid robust consumer spending

WASHINGTON, Sept 30 (Reuters) - The US economy ‌grew at a solid ​clip ​in the second quarter, driven by robust consumer spending and business investment related to the buildout of AI infrastructure.

Gross domestic product increased at a 2.2% annualized rate, revised up from ‌the previously estimated 1.5% pace, the Commerce Department's Bureau of Economic Analysis said in ⁠its third estimate of second-quarter GDP on Wednesday. Economists polled by Reuters had expected that GDP growth would be unrevised.

The economy grew ‌at a 2.5% rate in the ‌first quarter. That was revised up from the previously reported 2.1% pace.

The BEA revised GDP data going back to 2021 to reflect updated information. The growth numbers suggest the economy has so far ​held up in the face of headwinds from the US-Israeli war with Iran, thanks to businesses aggressively investing in AI and generous tax refunds from last year's tax legislation underpinning consumer spending.

Consumer spending, which accounts ⁠for more than two-thirds of the economy, grew at a 3.8% rate last quarter, revised up from the previously reported 3.4% pace. Spending grew ​at a 0.7% rate in January-March quarter.

But even as consumers continue to spend, household budgets are increasingly under strain from higher inflation, notably gasoline prices. A survey ​from the Conference Board on Tuesday showed consumer confidence diving ‌to a near 12-1/2-year low in September.

Despite the anxiety over inflation, the vigorous pace of consumer spending appears to have continued in the third quarter, thanks to ⁠an AI-driven stock market rally as well as households tapping their savings and saving less. Business spending on equipment maintained double-digit growth.

Final sales to private domestic purchasers, which exclude trade, inventories and government spending, increased at a 4.6% pace in ⁠the second quarter. That was revised up from the previously reported 4.2% pace of growth. This measure of domestic demand ​increased at a 1.8% pace in the January-March quarter, revised up from the previously reported 1.7% rate.

When measured from the income side, the economy grew at a 2.6% rate, revised up from the initially estimated 2.2% pace, reflecting strong corporate profits. ‌Gross domestic income increased at a 2.5% pace in the January-March quarter. The average of GDP and GDI, also referred to as gross domestic output and ‌considered a better measure of economic activity, grew at a 2.4% rate last quarter. Gross domestic output was previously estimated ⁠to have increased at a 1.8% rate. ‌Output increased at a 2.5% rate ​in the first quarter.

The Federal Reserve this month raised interest rates for the first time in three years to tame inflation.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and ‌Andrea Ricci)

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