The U.S. economy continued to grow in the second quarter of 2023 even during a series of interest rate hikes intended to cool inflation.
According to the U.S. Bureau of Economic Analysis, the U.S. real gross domestic product increased at an annual rate of 2.4% in the second quarter of 2023, which is up from 2% during the first quarter of 2023.
The data indicated a rise in consumer spending, nonresidential fixed investment, state and local government spending and other services. It marked the fourth consecutive quarter of growth in the U.S.
The government's data indicated that personal income increased by $236.1 billion in the second quarter, led by increasing salaries and receipts on assets.
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Disposable personal income increased by $248.2 billion, the data showed.
Generally, periods of high interest rates tend to cool economic growth. On Wednesday, the Federal Reserve increased federal interest rates to the highest levels in more than 22 years.
Following the interest rate hikes of 2000, the U.S. reported a mild recession in 2001. When interest rates went up again in 2008, it was followed by a major recession in 2009.
Federal Reserve Chair Jerome Powell said more interest rate increases could follow.
"I would say it is certainly possible that we would raise funds again at the September meeting if the data warranted. And I would also say it's possible that we would choose to hold steady at that meeting. We're gonna be making careful assessments as I said, meeting by meeting," Powell said.
The Federal Reserve said its goal is to lower the inflation rate to 2%. As of June, the inflation rate dropped to 3% from a peak of over 9% a year earlier. Still, officials say there are factors that could keep inflation above 2%, including significant wage growth.
Over the last year, hourly wages have increased by 4.4%, according to the Bureau of Labor Statistics.
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