Driven by consumer spending, the U.S. economy experienced a robust 2.8% growth in GDP during the third quarter, outpacing forecasts.
At a Glance
- The U.S. GDP expanded by 2.8% in Q3, above expectations.
- Consumer spending, making up 70% of the economy, grew by 3.5%.
- Inflation nears the Federal Reserve’s 2% target.
- Consumer confidence and employment both show positive trends.
The Growth Story
The third-quarter growth of the U.S. economy, clocking in at an annualized 2.8%, highlights a continuing trajectory of economic resilience amid challenging conditions. The Gross Domestic Product (GDP) performance surpassed the forecasted 2.6%, supported significantly by consumer spending, which increased by 3.5% according to the Bureau of Economic Analysis data.
Increased consumer activity indicates a recovering confidence, aided by easing inflationary pressures. The personal consumption expenditures index shows inflation rising at a 1.5% annual pace, signaling that inflation is nearing the Federal Reserve’s target level. Ryan Sweet, an economist, notes this “sends a clear message that the economy is doing well, and inflation is moderating.”
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
Economic Dynamics
The strength of consumer spending is vital for economic vigor since it constitutes approximately 70% of U.S. economic activity. The Conference Board reported a significant rise in the Consumer Confidence Index in October, reflecting broad optimism. “If you’re a consumer and you’re working, then you’re going to spend,” Dana Peterson, Chief Economist for the Conference Board, observed.
Additionally, the labor market continues to provide a foundation for solid consumer earnings despite a slow in job growth.
Future Prospects
The Federal Reserve’s approach in cutting interest rates, coupled with diminishing inflation, could further bolster consumer confidence and spending power. Core PCE inflation, excluding food and energy, saw a decrease to 2.2% from 2.8% in the prior quarter, indicating positive economic adjustments. As the Bureau of Economic Analysis confirms, “US Gross domestic product increased at a 2.8% annualized pace in the third quarter.”
Experts say the positive indicators hint at a “soft landing” from recent economic turbulence.
