The U.S. economy demonstrated its resilience as it expanded by 2.8% in the third quarter of 2023, driven by robust consumer spending.
At a Glance
- U.S. GDP grew at an annualized rate of 2.8% in the third quarter, surpassing expectations.
- Consumer spending rose by 3.7%, comprising approximately 70% of economic activity.
- Inflation is nearing the Federal Reserve’s 2% target.
- The job market showed stability, despite slowed hiring rates.
Economic Growth Overview
During the third quarter of the year, the United States economy grew at an annualized pace of 2.8%, slightly below the 3% rate from the previous quarter but above predictions of 2.6%. The Bureau of Economic Analysis attributed this growth to increased consumer expenditure, which rose by 3.7%. This steady consumer engagement showcased enduring confidence in the economy amid stabilizing inflation rates.
As consumer spending constitutes nearly 70% of economic activity, it serves as a fundamental pillar affecting national growth. The economic landscape after moderating inflation revealed a strong spending culture, reflecting the consumer-centric nature of the economic climate.
The U.S. economy grew at a 2.8% annualized rate in Q3.https://t.co/qHGf5n4FeX#GDP
— BEA News (@BEA_News) October 30, 2024
Inflation and Consumer Spending
Additionally, the personal consumption expenditures index reflected a 1.5% annual rate increase, underscoring inflation’s proximity to the Federal Reserve’s 2% target. These figures carry implications for the Federal Reserve’s monetary policy, as evidenced by the recent half-percentage interest rate cut aimed at maintaining this growth trajectory.
U.S economy grew at a solid 2.8 percent pace last quarter, powered by consumer spending. https://t.co/OvtZij3QOX
— Inc. (@Inc) October 30, 2024
Political Implications and Consumer Confidence
This economic growth comes against a backdrop of political turmoil following Vice President Harris and former President Trump’s presidential campaigns, where economic performance was a critical theme.
Praising Biden administration policy, chief economist at the accounting and consulting firm RSM Joe Brusuelas commented, “The economy right now is firing on nearly all cylinders.”
Additionally, consumer confidence surged in October, marking its highest monthly gain since March 2021. This indicates long-term stability, with fewer consumers anticipating a recession.
