The latest figures from the Commerce Department indicate that the US economy displayed even more robust growth in the third quarter than previously thought, highlighting its impressive resilience despite earlier concerns about inflation and high borrowing costs.
According to the second estimate released by the Commerce Department on Wednesday, the Gross Domestic Product (GDP) surged at an annualized rate of 5.2% between July and September, surpassing the initial 4.9% estimate. This uptick in growth is attributed to increased business investments, government expenditures, housing market activities, and inventory expansion.
Business spending, reflected in nonresidential fixed investment, reversed its trajectory from a slight decline of 0.1% to a growth rate of 1.3%. Residential investment, indicative of housing market conditions, surged from the initial 3.9% to a notable 6.2%.
However, the revised consumer spending figure came in slightly lower at 3.6% compared to the initial estimate of 4%. Yet, this remains a strong growth pace and is indicative of the nation’s main economic drive.
Looking forward, experts anticipate a slowdown in economic growth in the final months of the year. This expectation is fueled by the depletion of pandemic savings and the continuation of elevated interest rates, which stand at a 22-year high.
While consumer spending appeared robust during Black Friday and Cyber Monday, setting new sales records according to Adobe Analytics, signs point to a potential cooling off in the fourth quarter. October saw a decline of 0.1% in retail sales, marking the first drop in seven months.
Real-time estimates for fourth-quarter GDP echo this anticipated slowdown. The Atlanta Fed’s projection places fourth-quarter GDP at an annualized rate of 2.1%, indicating a deceleration from the vigorous growth seen in the third quarter.
