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Economic News

United States: Real GDP Surprises to the Upside

July 27, 2023
Marc-Antoine Dumont
Senior Economist


  • According to the advance estimate released today by the U.S. Bureau of Economic Analysis, real GDP increased at an annualized rate of 2.4% in the second quarter of 2023. This came on the heels of a 2.0% gain in the first quarter and 2.6% in the final quarter of 2022.
  • Real consumer spending rose at an annualized pace of 1.6% in Q2. Spending on durable goods climbed 0.4%, while spending on nondurable goods was up 0.9%. Service spending rose 2.1%.
  • Nonresidential fixed investment edged up 7.7%. Nonresidential construction spiked 9.7%, its third successive quarterly gain. Investment in equipment posted a 10.8% gain. Investment in intellectual property products grew 3.8%. Residential investment was up 3.9%.
  • Private inventories increased by US$5.8 billion.
  • International trade made a small negative contribution to real GDP, detracting 0.12 percentage points. Real exports fell 10.8%, while real imports were down 7.8%.
  • Government spending rose 2.6%.


US real GDP growth was stronger than anticipated in the second quarter of 2023. Analysts had been expecting an annualized increase of around 1.8%. However, the higher than estimated print hides some of the more negative factors. Real spending growth slowed, particularly on the goods side, contributing just 0.2% to real GDP growth in Q2, compared to 1.3% in Q1. High interest rates are increasingly curbing households' ability to spend more, and we can expect the slowdown in spending to continue over the next few quarters.


The surge in real GDP growth is largely attributable to strong business investment, particularly construction in the manufacturing sector (+94.0%). The rebound in investment in equipment is a surprise, however, with ISM indexes showing signs of slowing.


Today's real GDP print paints a mixed picture. On the one hand, restrictive monetary policy is dampening consumer spending. On the other, robust business investment is a sign that economic activity remains strong. The Federal Reserve will need more data before it makes a call on another interest rate hike.