The US economy grew last quarter, bouncing back after shrinking in the first half of the year — but there are indications that consumer spending, which powers the US economy, is starting to soften.
Gross domestic product — the broadest measure of economic activity — rose by an annualized rate of 2.6% during the third quarter, according to initial estimates released Thursday by the Bureau of Economic Analysis. That’s a turnaround from a decline of 1.6% in the first quarter of the year and negative 0.6% in the second.
Economists had projected third-quarter growth of 2.4%, according to consensus estimates on Refinitiv.
President Joe Biden on Thursday hailed the GDP rebound, describing the report as “further evidence that our economic recovery is continuing to power forward.”
While the economic growth underscores that the United States is not currently in a recession, economists cautioned that the latest GDP report doesn’t mean one isn’t imminent.
Much of the gains were fueled by a rebalancing of imports and exports, with fewer foreign goods shipped to the United States as consumers shifted their attention away from pandemic-fueled spending on sofas, bikes and other durable goods and turned to travel and dining out.
Consumer spending grew by 1.4% on an annualized basis which, though better than expected, marks a slowdown from the first two quarters.
“Excluding the more volatile categories, the trajectory for growth looks weak,” Jeffrey Roach, chief economist for LPL Financial, said in a statement. “A deteriorating housing market and nagging inflation, along with an aggressive Federal Reserve, put the economy on unsure footing for 2023.”