US Q2 GDP: Red-Hot Inflation at 6.3%, Private Demand Strong, Debt-to-GDP Dips to 121.5%

The Bureau of Economic Analysis reported Q2 GDP data showing red-hot inflation with the GDP deflator soaring 6.3% annualized. Current-dollar GDP jumped 7.9% to $32.5 trillion, but real GDP grew only 1.5%. Domestic private-sector demand was strong: Real Final Sales to Private Domestic Purchasers rose 3.9%, the fastest since Q1 2023, driven by consumer spending (+3.2%) and private fixed investment (+7.0%). Consumer spending on durable goods surged 6.8%, services rose 2.2%, nondurables 4.4%. Private fixed investment jumped 7.0%, with equipment up 15.2% and intellectual property products up 8.8%, while structures fell 5.0%. Residential fixed investment grew 1.5%, first increase after five quarterly declines. Government consumption and investment fell 0.8%, with federal nondefense spending down 12.9% after a Q1 surge. Imports surged 11.5% annualized, driven by AI data-center related electronics, deducting 1.51 percentage points from GDP. Exports rose 4.5%, adding 0.50 percentage points. The trade deficit worsened to $1.08 trillion. The Treasury Debt-to-GDP ratio ticked down to 121.5% as the economy grew faster than debt in Q2.