WASHINGTON (NEWSnet/AP) — The U.S. economy grew at a 2.1% annual pace from April through June, extending its performance in the face of higher interest rates, the government said Thursday.

The second-quarter expansion of the nation's gross domestic product — its total output of goods and services — marked a modest deceleration from the economy's 2.2% annual growth from January through March. But it did meet the estimate for the latest quarter.

Consumer spending, business investment and state and local government outlays drove the second-quarter economic expansion.

The economy and job market have shown surprising resilience even as the Federal Reserve has dramatically raised interest rates to combat inflation, which last year hit a four-decade high. The Fed has raised its benchmark rate 11 times since March 2022, sparking concerns that ever-higher borrowing rates will trigger a recession.

Inflation has eased without causing much economic pain, raising hopes that the central bank can pull off a so-called soft landing — slowing the economy enough to conquer high inflation without causing a painful recession.

Still, those higher rates have taken a toll. Consumer spending, for example, rose at an annual rate of just 0.8% from April through June, down sharply from the government's previous estimate of 1.7% and the weakest such figure since the first quarter of 2022.

But business investment excluding housing, a closely watched barometer, rose at a 7.4% annual pace, the fastest rate in more than a year. And state and local government spending and investment jumped 4.7%, the biggest such quarterly gain since 2019.

Growth is believed to be accelerating in the current July-September quarter, fueled in part by many still-free-spending consumers.

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