US Economy Makes Limited Progress While Companies Temper Hiring

Gross domestic product rose at a 2.1% annualized pace in the second quarter, representing a markdown from the government’s previous estimate as business investment in equipment and inventories were revised lower. In the first quarter, the economy expanded at a 2% rate.

Even with a more tempered pace of hiring, the labor market remains resilient. That’s underpinning household demand, which is expected to help the economy accelerate in the current quarter. Moreover, the GDP data showed companies have made considerable headway trimming bloated inventory that has been constraining production.A gauge of the income generated and costs incurred from producing goods and services — gross domestic income — rose 0.

While that strength has led many to push out their recession forecasts — or scrap them altogether — a sustained acceleration in activity could force the Federal Reserve to step on the brakes harder to ensure inflation continues to fall.The report also includes the government’s first estimate of corporate profits in the quarter. Adjusted pretax corporate profits fell 0.4% in the April to June period, reflecting a drop at financial corporations. From a year earlier, profits were down 6.5%.

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