WASHINGTON - The U.S. economy maintained a fairly solid pace of growth in the second quarter and activity appears to have gathered speed this quarter, but a looming government shutdown and an ongoing strike by auto workers are dimming the outlook for the rest of 2023.
Some economists believe that the economy's resilience and tight labor market could give the Federal Reserve ammunition to raise interest rates again in November. Others, however, expect the darkening cloud over the economy would discourage the U.S. central bank from tightening monetary policy further.
Gross domestic product increased at an unrevised 2.1% annualized rate last quarter, the government said in its third estimate of GDP for the April-June period. That was in line with economists' expectations. The economic picture was little changed from 2017 to 2022, with GDP growing at an average annual rate of 2.2%, up from the previously estimated 2.1% pace. Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.The economy is being underpinned by a resilient labor market, which is driving strong wage gains. Growth estimates for the July-September quarter are currently as high as a 4.9% rate.