DUNCAN ANDISON - STOCK.ADOBE.COM PHOTOThe Bureau of Economic Analysis yesterday reported that the U.S. gross domestic product grew 4.9% during the third quarter, more than doubling the second quarter rate of 2.1%.
According to reporting in The Wall Street Journal, “Consumer outlays rose at an annual rate of 4%, jumping from a gain of 0.8% in the prior quarter. Americans’ spending on travel, concerts and movies has been supported by a strong labor market and savings accumulated during the Covid-19 pandemic.”
WSJ added that there are warning signs, even with the strong numbers. “Americans saved less, and their incomes, adjusted for inflation, fell over the summer. That could mean the pace of spending will ease in coming months. Business investment also stalled. Meanwhile, rising long-term interest rates, wars in Ukraine and the Middle East, and the possibility of a partial government shutdown could cause economic cracks to emerge.”
Andrew Hunter, deputy chief U.S. economist at Capital Economics, told WSJ that “it would be very surprising if consumption growth remains this strong in the fourth quarter. There’s room for higher rates and various other headwinds to start taking a bit more of a toll.”
Thursday’s Bureau of Economic Analysis report showed prices, excluding volatile food and energy categories, rose an annualized 2.4% in the third quarter, only modestly above the Federal Reserve’s 2% target. Despite the economic growth, the Fed is expected to maintain its current funds lending rate of 5%.
