<p>The economic recovery stayed on track in the spring, as American consumers continued spending despite rising interest rates and warnings of a looming recession.</p>.<p>Gross domestic product, adjusted for inflation, rose at a 2.4% annual rate in the second quarter, the Commerce Department said Thursday. That was up from a 2% growth rate in the first three months of the year and far stronger than forecasters expected a few months ago.</p>.<p>Consumers led the way, as they have throughout the recovery from the severe but short-lived pandemic recession. Spending rose at a 1.6% rate, with much of that coming from spending on services, as consumers shelled out for vacation travel, restaurant meals and Taylor Swift tickets.</p>.<p>“The consumer sector is really keeping things afloat,” said Yelena Shulyatyeva, an economist at BNP Paribas.</p>.<p>The resilience of the economy has surprised many economists who thought that high inflation — and the Federal Reserve’s efforts to stamp it out through aggressive interest-rate increases — would lead to a recession, or at least a clear slowdown in the first half of the year. For a while, it looked as if they were going to be right: Tech companies were laying off tens of thousands of workers, the housing market was in a deep slump and a series of bank failures set up fears of a financial crisis.</p>.<p>Instead, layoffs were mostly contained to a handful of industries, the banking crisis did not spread and even the housing market has begun to stabilize.</p>.<p>“The things we were all freaked out about earlier this year all went away,” said Michael Gapen, chief US economist at Bank of America.</p>.<p>Inflation has also slowed significantly. That has eased pressure on the Fed to keep raising rates, leading some forecasters to question whether a recession is such a sure thing after all. Jerome Powell, the Fed chair, said Wednesday that the central bank’s staff economists no longer expected a recession to begin this year.</p>.<p>Still, many economists say consumers are likely to pull back their spending in the second half of the year, putting a drag on the recovery. Savings built up earlier in the pandemic are dwindling. Credit card balances are rising. And although unemployment remains low, job growth and wage growth have slowed.</p>.<p>“All those tailwinds and buffers that were supporting consumption are not as strong anymore,” said Blerina Uruci, chief US economist at T Rowe Price. “It feels to me like this hard landing has been delayed rather than canceled.”</p>
<p>The economic recovery stayed on track in the spring, as American consumers continued spending despite rising interest rates and warnings of a looming recession.</p>.<p>Gross domestic product, adjusted for inflation, rose at a 2.4% annual rate in the second quarter, the Commerce Department said Thursday. That was up from a 2% growth rate in the first three months of the year and far stronger than forecasters expected a few months ago.</p>.<p>Consumers led the way, as they have throughout the recovery from the severe but short-lived pandemic recession. Spending rose at a 1.6% rate, with much of that coming from spending on services, as consumers shelled out for vacation travel, restaurant meals and Taylor Swift tickets.</p>.<p>“The consumer sector is really keeping things afloat,” said Yelena Shulyatyeva, an economist at BNP Paribas.</p>.<p>The resilience of the economy has surprised many economists who thought that high inflation — and the Federal Reserve’s efforts to stamp it out through aggressive interest-rate increases — would lead to a recession, or at least a clear slowdown in the first half of the year. For a while, it looked as if they were going to be right: Tech companies were laying off tens of thousands of workers, the housing market was in a deep slump and a series of bank failures set up fears of a financial crisis.</p>.<p>Instead, layoffs were mostly contained to a handful of industries, the banking crisis did not spread and even the housing market has begun to stabilize.</p>.<p>“The things we were all freaked out about earlier this year all went away,” said Michael Gapen, chief US economist at Bank of America.</p>.<p>Inflation has also slowed significantly. That has eased pressure on the Fed to keep raising rates, leading some forecasters to question whether a recession is such a sure thing after all. Jerome Powell, the Fed chair, said Wednesday that the central bank’s staff economists no longer expected a recession to begin this year.</p>.<p>Still, many economists say consumers are likely to pull back their spending in the second half of the year, putting a drag on the recovery. Savings built up earlier in the pandemic are dwindling. Credit card balances are rising. And although unemployment remains low, job growth and wage growth have slowed.</p>.<p>“All those tailwinds and buffers that were supporting consumption are not as strong anymore,” said Blerina Uruci, chief US economist at T Rowe Price. “It feels to me like this hard landing has been delayed rather than canceled.”</p>