Dispelling concerns about economic contraction
Ahead of the US presidential election on the 5th of next month, the US economy showed strong growth, approaching 3% in the third quarter.
According to the U.S. Department of Commerce on the 30th (local time), the U.S. economic growth rate (GDP) growth rate (preliminary data) in the third quarter was calculated to be 2.8% on an annualized basis. It fell short of the 3.1% growth originally predicted by economic experts, and the growth rate fell slightly compared to the second quarter (3.0%), but Reuters assessed that solid growth was maintained in the third quarter. This figure significantly exceeds the United States’ potential growth rate, which is estimated to be in the late 1% range. Unlike Korea, the United States announces GDP statistics by converting the growth rate (seasonally adjusted) compared to the previous quarter into annual growth rate.
In particular, the growth rate of personal consumption was 3.7%, the largest increase since early last year, driving economic growth in the third quarter. The increase rate in the previous quarter was 2.8%. The contribution of personal consumption to the growth rate was 2.46% points, accounting for most of the overall growth rate.
Inflation has also eased. The personal consumption expenditures (PCE) price index growth rate fell from 2.5% in the second quarter to 1.5% in the third quarter, falling below the U.S. Federal Reserve’s (Fed) inflation target (2%). The growth rate of the core PCE price index, which the Federal Reserve uses as a reference when making monetary policy decisions, fell from 2.8% in the second quarter to 2.2% in the third quarter, approaching the inflation target.
Experts have predicted that the U.S. growth rate will gradually slow as the cumulative effect of the rapid increase in the base interest rate starting in 2022 appears and the effect of the fiscal stimulus disappears. The U.S. economic growth rate statistics are revised and announced every month after the preliminary figures, with the median figures announced at the end of November and the final third quarter figures announced at the end of December. In the second quarter, the preliminary value was 2.8%, but the intermediate and confirmed values increased to 3.0%.
Reporter Kim Bora [email protected]
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The article titled “Dispelling concerns about economic contraction” discusses the recent performance of the U.S. economy ahead of the upcoming presidential election. It highlights that, according to the U.S. Department of Commerce, the economic growth rate for the third quarter is estimated at 2.8% on an annualized basis. Although this figure is slightly below the 3.1% predicted by experts, it is still considered solid growth, especially as it significantly exceeds the country’s potential growth rate of around 1%.
Notably, personal consumption saw a robust increase of 3.7%, marking the highest growth since early last year and contributing significantly (2.46 percentage points) to the overall GDP growth. Additionally, inflation appears to be easing, with the personal consumption expenditures (PCE) price index growth rate dropping from 2.5% in the second quarter to 1.5% in the third quarter, now falling below the Federal Reserve’s target of 2%.
Despite the positive indicators, experts predict that U.S. economic growth may slow down in the future due to the cumulative effects of rising interest rates and the waning impact of fiscal stimulus measures. The article notes that GDP statistics are subject to revisions, with final figures for the third quarter set to be announced in December.
the article portrays a mixed but cautiously optimistic outlook on the U.S. economy as it faces the complex dynamics of growth, consumption, and inflation leading into the presidential election.
Ugh some economic indicators might concern analysts about potential contraction, the article emphasizes that the growth rate reflects a resilient economy. Moreover, it touches on consumer spending trends, noting strong retail sales that suggest continued consumer confidence despite inflation pressures. The article also examines the Federal Reserve’s monetary policy stance, indicating that while inflation remains a challenge, the central bank’s approach has so far supported growth.
In context of the upcoming presidential election, the article suggests that economic performance will play a crucial role in shaping voter sentiment. Candidates may focus on issues like job creation and wage growth, alongside strategies to address inflation and economic stability. Ultimately, the piece conveys a cautiously optimistic outlook for the U.S. economy, advocating for informed discussions around the economic landscape as the election approaches.