The euro continues to grow in price against the US dollar. On Thursday, the quotes reached the level of 1.1890.
The data showed that the US economy grew by 6.5% year-on-year in the second quarter, which is lower than the market consensus forecast of 8.5%. Despite the lower growth rate in the second quarter, real GDP is now 0.8% higher than it was at its peak before the pandemic at the end of 2019. At the same time, the volume of production is still 2.5% lower than the pre-crisis level. Economic growth in the second quarter was mainly driven by consumer spending. Real spending on personal consumption increased by 11.8%, which was stronger than most analysts expected. Almost all the main categories of expenses showed strong growth.
Overall GDP growth is projected to remain generally strong in the coming quarters. Consumers still have a lot of cash, and there is still a pent-up demand for services. In addition, the recent monthly indicators of orders in the industry showed that business spending on equipment remains stable. These orders will need to be completed in the coming months. The data contained in yesterday's report is another indication that inflation remains a problem. The deflator for personal consumption expenditures, which is a measure of consumer prices, jumped in the second quarter to 6.4% in annual terms, and this is the highest consecutive increase since 1982. The noticeable increase in consumer prices in the second quarter reflects a combination of strong growth in consumer spending and limited supply.
The forecast assumes a rollback of the euro/dollar exchange rate to the levels of 1.1870, 1.1850 and 1.1825.