The Commerce Department's report emphasized the economic growth last quarter in terms of income.
It showed that in the second quarter, the U.S. economy shrunk at a more moderate rate than previously anticipated.
This, as consumer spending offset some of the drag from a severe slowdown in inventory accumulation, allaying worries of a recession.
Furthermore, its economic strength matches the recent favorable labor market, retail sales, and industrial output figures.
Since employment is still growing, the mid-cycle slowdown resulted from supply chain problems, not production issues. Thus, the perspectives of economic experts remain positive.
The government stated last quarter's GDP fell 0.6% annually in its second estimate. It was revised up from 0.9%.
The first-quarter economy shrank 1.6%. These two successive quarterly GDP drops can be described as a technical recession.
However, declines in the U.S. GDP often resulted from discrepancies in inventories. Supply chain disruptions that have left incomplete products in factories or docks cannot be counted as GDP until they are in inventory.
Last quarter, inventories grew by $83.9 billion after rising by $188.5 billion in the first quarter. They cut 1.83 points from GDP.
Consumer spending climbed 1.5%, up from 1.0%. Gross domestic income grew to 1.8% in the first quarter, then 1.4% in the second quarter.
While GDI and GDP might fluctuate from quarter to quarter, there has been no convergence since 2020, leaving a significant disparity of 3.9 percentage points.
Gross domestic output, the average GDP and GDI, grew 0.4% in April-June, up from 0.1% in the first quarter.
An economics professor at Boston College, Brian Bethune, admits there is still a long way ahead for production to be higher than income.
Profits and pay improvements in a tight labor market fuel income growth. National after-tax earnings without inventory valuation and capital consumption adjustments grew by $284.9 billion, or 10.4%, accelerating from 1.0% in January-March.
They gained as oil prices rose because of the Russia-Ukraine confrontation. Profits rose 11.9% over last year.
The economy's strength can maintain the aggressive monetary policy tightening campaign but increase the risk of decline. Focusing on the labor market is required to orchestrate an economic slowdown without causing a recession.
In July, unemployment in the U.S. reduced to 3.5% from 3.6% in June. At the end of June, there were 10.7 million job opportunities or 1.8 openings for every unemployed individual.
