Contrary to forecasts of an imminent recession, the U.S. economy appeared to be growing at its fastest pace in nearly two years in the third quarter of this year. This can be explained by the fact that rising wages in a tight labor market contributed to an increase in consumer spending.
Advance third-quarter GDP estimates to be released Thursday by the Commerce Department are also expected to show a rebound in housing investment after nine quarters of decline.
While the strong growth expected in the previous quarter is unlikely to be sustained, it will demonstrate the stability of the economy amid the Federal Reserve’s aggressive rate hikes. However, it could slow in the fourth quarter due to autoworker strikes and millions of Americans resuming payments on their student loans.
Based on expectations for productivity growth in the third quarter, most economists have revised their forecasts and now believe the Federal Reserve will be able to provide a “soft landing” for the economy.
US GDP is likely to have grown 4.3% in the third quarter, the fastest since the fourth quarter of 2021, according to a Reuters poll of economists. In comparison, in the second quarter the economic growth rate was 2.1%.
Estimates ranged from 2.5% to 6%, with the spread reflecting the fact that some underlying data, including September durable goods orders, the trade deficit, and wholesale and retail inventories, will be released at the same time. than the GDP report.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was likely the main driver of growth, as Americans bought durable goods, including cars, and attended concerts.
Consumer spending is supported by a strong labor market. Although wage growth has slowed, they are growing slightly faster than inflation, increasing the purchasing power of the population.