WASHINGTON -- The U.S. economy grew last quarter at a healthy 3% annual pace, fueled by strong consumer spending and business investment, the government said Thursday in an upgrade of its initial assessment.

The Commerce Department had previously estimated that the nation's gross domestic product — the total output of goods and services — expanded at a 2.8% rate from April through June.

The second-quarter growth marked a significant acceleration from a slow 1.4% growth rate during the first three months of 2024.

Consumer spending, which represents about 70% of U.S. economic activity, increased at a 2.9% annual rate last quarter, up from 2.3% in the initial government estimate. Business investment expanded at a 7.5% rate, primarily driven by a 10.8% surge in investment in equipment.

Thursday's report revealed an economy that is resilient but gradually slowing under the pressure of ongoing high interest rates.

The state of the economy is a major concern for voters ahead of the November presidential election. Many Americans remain frustrated by high prices, even though inflation has sharply declined since reaching a four-decade high in mid-2022.

The Federal Reserve hiked its benchmark interest rate 11 times throughout 2022 and 2023, pushing it to a 23-year high. This helped to bring down annual inflation from a peak of 9.1% to 2.9% last month. The increased borrowing costs for consumers and businesses, a consequence of these rate hikes, were expected to trigger a recession. However, the economy has continued to expand, and employers have maintained hiring levels.

With inflation now slightly above the Fed's 2% target and expected to cool further, Chair Jerome Powell has essentially declared victory over inflation . The Fed is prepared to begin lowering its key interest rate at its next meeting in mid-September.

Sustained lower interest rates from the Fed aim to achieve a “soft landing,” where inflation is tamed, the job market stays healthy, and a recession is avoided. Lower interest rates on auto loans, mortgages, and other consumer borrowing would likely follow.

The central bank's focus has shifted from battling inflation to supporting a weakening job market. Unemployment has climbed for four consecutive months, reaching 4.3%, although this remains historically low. Job openings and hiring have also decreased but remain strong overall.

The Commerce Department revised its initial estimate of GDP growth for the April-June quarter on Thursday, issuing its second report. A final estimate will be released later in September.