The US economy grew at a faster-than-expected pace in the second quarter.

The Bureau of Economic Analysis's advance estimate of second quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 2.8% during the period, well above the 2% growth expected by economists surveyed by Bloomberg. The reading came in higher than first quarter GDP, which was revised down to 1.4%.

“We think [the second quarter] will end up being the best quarter for the economy this year,” Nationwide financial markets economist Oren Klachkin wrote of this morning’s Q2 GDP report. “We should receive cooler GDP reports from here on out as consumers tighten their purse strings and businesses become more reticent to invest and hire.”

Meanwhile, the "core" Personal Consumption Expenditures index, which excludes the volatile food and energy categories, grew by 2.9% in the second quarter, above estimates of 2.7% but significantly lower than the 3.7% gain in the prior quarter.

The data's release comes as investors try to gauge when the Federal Reserve will start cutting interest rates and if the central bank can achieve a soft landing, where inflation comes down to its 2% target without a significant economic downturn.

Entering Thursday, markets had priced in a 100% chance the Fed would cut rates by the end of its September meeting.

"The data today will reinforce the notion that the Fed has the benefit of time," Renaissance Macro head of economic research Neil Dutta wrote in a note following Thursday's release. "In the Fed’s mind, there is no need to rush with private domestic demand growing at a solid pace over the second quarter. July remains a set up meeting for September."

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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