New York
CNN business
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The latest Gross Domestic Product report showed that the US economy grew much faster than expected in the third quarter, with GDP growing at an annualized rate of 2.9%.
This is an improvement from the first government figure in October, which showed economic activity increased by 2.6%, beating Refinitiv’s forecast of 2.7%. And this is a notable turnaround from contractions of 1.6% in the first quarter and 0.6% in the second quarter of this year.
The better-than-expected growth comes as consumer spending is higher than the government’s previous measure and import figures have been revised down. Imports are deducted from GDP, a broad measure of domestic economic activity.
The strong numbers don’t necessarily rule out risk projections that many economists see the U.S. economy slipping into recession at some point next year.
However, the better-than-expected growth is expected to help the economy recover as it addresses headwinds caused by the Federal Reserve’s aggressively large interest rate hikes, which seek to slow the economy to curb decades of high inflation. showing power.
The US labor market, which will be measured again on Friday when the November jobs report is released, remains strong with employer employment and unemployment rates at half-century lows. And while consumers struggle with rising prices, they continue to spend their money. More than two-thirds of his US economic activity is supported by consumer spending.
One of the biggest drags on economic growth is declining spending on housing construction in the face of rising interest rates. The GDP report showed that investment in housing construction cut overall growth by 1.4 percentage points. You have grown at your pace.
“Previous Fed rate hikes have only pushed the housing sector into recession, the rest of the economy is doing pretty well,” said Christopher Lupkey, chief economist at market research firm Fwdbonds. Stated.
Rupkey said the report gives the Fed the green light to continue aggressive rate hikes.
“Consumer spending and business spending are doing well despite the Federal Reserve raising interest rates by 3.75% this year,” he said. “If the Fed is trying to hit the brakes and slow the economy down, it hasn’t done enough yet.”
