New York /
The U.S. economy grew at an annualized rate of 2.8 percent in the third quarter, in the latest sign that American consumers remain resilient ahead of the presidential election.
Data from the Bureau of Economic Analysis shows that gross domestic product (GDP) growth came in slightly below estimates of a 3 percent expansion and was just below the 3 percent rate recorded in the previous quarter.
Evidence of the resilience of the US economy comes just days before the presidential election. Kamala Harristhe Democratic vice president, trumpets the management of the economy by the current government, although her opponent, donald trumpblame inflation and the high costs of living.
The GDP figures come a week before the Federal Reserve meets to decide on interest rates, after it kicked off its easing cycle last month with a half-point cut, a larger figure than usual.
The report, which shows the continued streak of GDP growth, reflected the willingness of American consumers to continue opening their wallets, despite persistent inflationary pressures.
Consumer spending accelerated to 3.7 percent, while a closely watched gauge of demand that excludes inventories, trade and government spending rose to 3.2 percent from 2.7 in the latest quarter; however, residential investment fell 5.1 percent.
“As far as it matters, growth performed incredibly well in the third quarter,” said Tom Porcelli, chief US economist at PGIM Fixed Income. “It is very difficult to think in practice about having a recession in the short and medium term.”
The data, which covers the period between July and September, confirms the strength of the world’s largest economy, something that has defied expectations of a recession even though the Fed kept interest rates high to curb inflation.
The US central bank cut rates by half a percentage point more than usual last month (its first reduction since 2020), leaving the benchmark between 4.75 and 5 percent.
However, even as inflation has held up, US consumer spending has remained robust, boosted by the country’s healthy labor market. The unemployment rate rose to 4.1 percent from its multi-decade low of 3.4 percent in 2023.
Economists say the rise in unemployment is the result of more workers entering the labor market due to increased immigration. That has helped ease wage pressures and, in turn, inflation, with limited damage to the labor market, raising the prospect of a so-called soft landing for the economy as the Fed begins cutting rates.
Data shows private sector employers added 233,000 net jobs in October, the biggest increase since July 2023. Tomorrow’s nonfarm payrolls report is expected to show job growth fell to 113,000 for the month. past, a figure that will reflect the disruptions caused by the intense hurricanes that hit several states in the southeast of the country.
The US surpassed its peers among the world’s strongest economies. The International Monetary Fund (IMF) forecast US growth of 2.8 percent this year and 2.2 percent next, compared to 3.2 percent in both years for the world economy as a whole. U.S. consumer confidence has also been strong, reaching a nine-month high in October, according to a report released by the Conference Board.
“Americans once again demonstrate that they are leading global consumers: ‘nobody can touch us,’” said David Kelly, chief global strategist at JP Morgan Asset Management.
The report shows that the share of consumers expecting a recession in the next 12 months fell to its lowest level since the question was first asked in July 2022. The share of those who thought the economy was already in contraction also decreased.
Stock markets moved moderately, with the S&P 500 swinging between modest gains and losses to close down 0.3 percent in New York, while the Nasdaq Composite fell 0.6 percent from its record closing level in the previous session.
Turning to the government bond market, the policy-sensitive two-year Treasury yield rose 0.05 percentage point to 4.17 percent, while the 10-year bond yield gained 0.01 percentage point to trade at 4.28 percent. Yields fall as prices rise.
