The United States economy has reached cruising speed. If you look in the rearview mirror, by now we should have already fallen into recession, as many experts predicted. However, the Gross Domestic Product (GDP) grew at an annualized rate of 4.9% in the third quarter, the largest boost in almost two years. This is based on the expansion of consumer spending despite high interest rates, persistent inflation and other national and international setbacks.
Analysts had bet on a lower increase, at most 4.7% among the most optimistic. This strong acceleration, in addition to the strength of consumption, is due to the increase in inventories, exports, real estate investments and government-related spending. This is the largest increase since the fourth quarter of 2021.
Consumer spending, which is measured from the personal perspective of buyers, rose 4%, which represents an increase of 0.8% compared to the second quarter, said the Commerce Department report regarding the period from July to September. There was a division between spending on goods and services, with a 4.8% improvement for the first concept and 3.6% in the second. Gross private domestic investments rose 8.4%, while government spending and investments jumped 4.6%.
These good data had little impact on the stock markets as soon as they were known, some indices even fell into negative numbers. Another demonstration that the stock market thermometer does not always reflect the health of the citizens’ economy.
This momentum may cause the Federal Reserve (Fed) to maintain its strict policy on the price of money at its meeting next month. But analysts have not yet ruled out the possibility that rates will rise again in November, based on their considerations.
These forecasts are based on the resilience that the economy still demonstrates after eleven rate increases since March 2022. This power is reflected above all in the labor market, which does not take a step back despite the central bank’s tough monetary policy. US. The salary improvements hold up to inflation, still above the 2% goal pursued by the Fed.
Naturally, the GDP data made many ask, “where is the recession?” If the predictions from a few months ago were true, this factor should have had an enormous impact on consumption today. This aspect was, however, responsible for 68% of the increase in GDP in the third quarter. So, despite these omens, the US economy has continued to grow, which gives credence to “Bidenomics”, the name given to the White House’s economic strategy.
This does not mean that there are still voices that continue to predict a recession due to a slowdown in consumption. It is clear that, if we persevere, one day we will get it right, replied those who boast about economy.
