Inflation has also slowed significantly. Consumer prices rose at a 2.6 percent rate in the second quarter, down from 4.1 percent in the first quarter and from more than 7 percent in the first half of last year. That has eased pressure on the Fed to keep raising rates, leading some forecasters to question whether a recession is such a sure thing after all. Jerome H. Powell, the Fed chair, said on Wednesday that the central bank’s staff economists no longer expected a recession to begin this year.
White House officials pointed to the report as evidence that President Biden’s economic policies, including investments in infrastructure and green energy, were paying off. In a blog post on Thursday, the president’s Council of Economic Advisers noted that investment in manufacturing facilities contributed more than a third of a percentage point to overall G.D.P. growth, the most in more than four decades.
Mr. Biden, in a statement, said the data was evidence of “Bidenomics in action.”
Weiler Inc., a manufacturer of paving and forestry equipment, recently opened a 120,000-square-foot building at its Knoxville, Iowa, headquarters. The company will use only about a quarter of the space right away, said Patrick Weiler, its president and chief executive. But he is betting on continued growth.
“We just think we’ve got a pretty good future, and it seemed like a logical investment,” he said.
Demand has been strong coming out of the pandemic, Mr. Weiler said. Now that supply-chain disruptions are being resolved — for a while, the company had trouble getting the engines that power its equipment — he can meet that demand. Federal infrastructure spending, he added, should help keep sales strong even if private demand slows.
“There’s very good end-user confidence because they see a lot of work coming,” Mr. Weiler said.
Still, many economists say consumers are likely to pull back their spending in the second half of the year, putting a drag on the recovery. Savings built up earlier in the pandemic are dwindling. Credit card balances are rising. And although unemployment remains low, job growth and wage growth have slowed.
“All those tailwinds and buffers that were supporting consumption are not as strong anymore,” said Blerina Uruci, chief U.S. economist at T. Rowe Price. “It feels to me like this hard landing has been delayed rather than canceled.”