The United States economy grew at an annual rate of 2.8% in the third quarter, driven by strong consumer expenditure and increased exports, according to data released on Wednesday.
Additionally, the commerce department’s report mentioned that the US gross domestic product (GDP) decreased from the 3% rate recorded in April-July. The GDP of the world’s largest economy has exceeded 2% in eight out of the past nine quarters.
The GDP data also revealed that a measure of the economy’s fundamental strength which includes consumer spending and private investment and excludes variable components such as exports, inventories and government expenditure, increased at a robust 3.2% annual rate from July through September, improving from 2.7% in the April-June period.
Consumer expenditure, representing approximately 70% of US economic activity, grew to a 3.5% annual rate in the last quarter, rising from 2.8% in April-June and marking the fastest increase since the fourth quarter of 2023. Exports also enhanced third-quarter growth, rising at a 7.5% rate, the highest in two years.
However, both consumer spending and export growth were below the Commerce Department’s initial projections.
Business investment growth decelerated notably due to reduced investment in residential properties and commercial structures like offices and warehouses, although equipment expenditure increased significantly.
The incoming President-elect will assume leadership of a generally stable economy when he takes office next month.
The economic indicators show stability. The unemployment rate stands at 4.1%. Inflation, which reached its peak at 9.1% in June 2022, has decreased to 2.6%. While this exceeds the Federal Reserve’s 2% objective, the central bank’s satisfaction with inflation control led to interest rate reductions in September and this month. Most market analysts anticipate another rate cut in December.
The latest report presented positive indicators regarding inflation. The PCE index, the Federal Reserve’s preferred inflation measure, increased at only 1.5% annually in the last quarter, reduced from 2.5% in the previous quarter. Core PCE inflation, excluding volatile food and energy costs, measured 2.1%, down from 2.8% in the April-June period.
The public continues to experience inflation’s impact, with prices approximately 20% higher than February 2021, when inflation began rising.
The President-elect has outlined significant economic changes. His recent announcement included plans for new import duties on Chinese, Mexican and Canadian goods. Economic experts consider such tariffs inflationary, as American importers bear these costs and typically transfer them to consumers. Additionally, his proposed deportation of unauthorised workers could create labour shortages for businesses.
The Commerce Department will release the final third-quarter GDP report on December 19.
