In comparison to the first two quarters of the year, the US economy had substantially stronger GDP growth in the third quarter.
In the third quarter, real GDP (real gross domestic product) increased at an annualised rate of 4.9%, as per the Bureau of Economic Analysis’s advance estimate. This rise exceeds the 4.3% prediction.
Compared to the first and second quarter growth rates of the year, which were about 2%, the early estimate points to substantially better growth.
Based on seasonally adjusted statistics at annual rates, real personal consumption expenditures increased by 4.0%, faster than the 0.8% increase in the second quarter. In the meantime, real fixed investments decreased in the third quarter, falling from 5.2% in the second to 0.8%.
“The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment,” according to a release regarding the newly released data. “Imports, which are a subtraction in the calculation of GDP, increased.”
The strong economic growth was hailed by the Biden administration. The White House National Economic Council’s deputy director, Joelle Gamble, told Insider that while inflation is declining, recent GDP data have indicated strong growth, supported by investments in industry and consumer spending.
“I think the bottom line here is that we’re seeing an economy that is growing strong, that is growing from the middle out and the bottom up, not the top down,” said Gamble.
While the “signs of economic strength will fuel speculations that the economy is reaccelerating,” Gregory Daco, chief economist at EY, stated in a statement that despite the gain, “we do not expect such strong momentum will be sustained.”
“Cost fatigue, rising debt servicing costs and slowing job growth are about to be felt more widely by consumers and businesses,” Daco stated. “In that regard, the broad-based pullback in business equipment investment is a cautionary tale.”
Even while the preliminary estimate and the data from the first two quarters indicate robust GDP growth, some analysts predict a mild recession, which they feel is imminent.
For instance, The Conference Board believes that 2019 will see a little decline.
“While the prospects for a ‘soft landing’ have risen, The Conference Board believes it is more probable that the US economy will slip into a short and shallow recession in early 2024,” according to a brief.
“As the economy cools in early 2024, so too will the labour market,” the brief stated. Following a revised increase of 227,000 jobs in August, the US labour market created 336,000 jobs in September.
A recent report from Raymond James also stated that “growth will be much slower over the next nine months and lead to a mild recession.” This was stated by Larry Adam. The growing challenges that customers face are one factor contributing to this.
A recent article regarding the findings of Bankrate’s quarterly survey of economists pointed out that, despite possible concerns about a mild recession, the likelihood of one based on respondents’ average forecasts decreased from 65% in the third quarter of 2022 to 46% in the same quarter this year.