Washington. The US economy grew at a robust annual rate of 2.8 percent last quarter, on the back of strong consumer and business spending despite enduring high interest rates.

According to the Commerce Department's report released on Thursday, gross domestic product (GDP) increased significantly in the April-June quarter, following a slower 1.4 percent growth in the January-March period. The rise in growth was partly due to businesses expanding their inventories, surpassing economists' expectations of a 1.9 percent annual growth rate.

Despite this recent uptick, the US economy has shown signs of cooling due to the highest borrowing rates in decades, implemented by the Federal Reserve to combat persistent inflation. The annualized GDP growth had consistently exceeded 2 percent from mid-2022 through 2023, with particularly strong expansions of 4.9 percent and 3.4 percent in the final two quarters of last year.

As the presidential campaign heats up, the state of the economy has become a focal point for Americans. While inflation has notably decreased from 9.1 percent in 2022 to 3 percent, prices remain elevated compared to pre-pandemic levels. This slowdown is largely attributed to the significantly higher borrowing costs for home and auto loans, credit cards, and business loans, a consequence of the Federal Reserve's aggressive interest rate hikes.

The Fed's actions, including 11 rate increases over 2022 and 2023, were aimed at curbing the inflation surge that began in spring 2021 as the economy rebounded rapidly from the COVID-19 recession, exacerbated by supply shortages and geopolitical events like Russia's invasion of Ukraine.

With inflation moving towards the Fed's 2 percent target, officials have indicated that they are ready to begin cutting rates soon, with expectations for a rate reduction in September.