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The US economy slowed slightly more than expected in the third quarter due to easing inflation and strong consumer spending.
The Commerce Department's Bureau of Economic Analysis released preliminary estimates for the third quarter of gross domestic product (GDP), showing that the U.S. economy grew at an annual rate of 2.8% in the third quarter from July to September. .
Economists surveyed by LSEG had expected the economy to grow 3% in the quarter. The report also pegged the growth rate for the second quarter at 3%.
Personal consumption, which accounts for about two-thirds of GDP, rose 3.7% in the third quarter, accelerating from 2.8% in the second quarter.
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According to preliminary estimates from the Commerce Department, the U.S. economy grew at an annual rate of 2.8% in the third quarter. (Joe Radle/Getty Images/Getty Images)
Business investment rose 0.3% in the third quarter as private inventory investment slowed and housing investment fell more sharply.
Current dollar personal income increased by $221.3 billion in the third quarter, the report said, but the increase was smaller than the $315.7 billion in the second quarter, with the increase primarily reflecting higher compensation. Personal disposable income increased $166 billion (3.1%) in the third quarter, after increasing $260.4 billion (5%) in the previous quarter.
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The main driver of growth in the third quarter was consumer spending. (Robert Nickelsburg/Getty Images/Getty Images)
Personal savings in the third quarter were $1.4 trillion, down slightly from $1.13 trillion in the second quarter, but the personal savings rate was also 4.8% in the third quarter, compared to 5.2% in the previous quarter. , down from the previous quarter.
Ryan Sweet, chief U.S. economist at Oxford Economics, said: “Third-quarter GDP growth appears to be lower than it seems, with real final sales to domestic buyers equaling the largest increase since the first three months of 2023. Even better.” “Although GDP is negative, it sends a clear message that the economy is doing well and inflation is moderating, which is good news for the Fed.”
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Business investment cooled in the third quarter, according to a Commerce Department report. (Emily Elkonin/Bloomberg via Getty Images/Getty Images)
The Fed is scheduled to meet next week and is expected to announce a 25 basis point rate cut, after starting the cycle with a 50 basis point cut in September.
Last month's better-than-expected labor market and inflation data moved the market from expecting another 50 basis point (bp) rate cut to expecting a smaller rate cut in November.
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“We do not expect third-quarter GDP to change the Fed's calculations for its November meeting, and our expectation remains for a 25bp rate cut.However, if stronger-than-expected data continues to be released, the Fed could “For now, we are sticking with our expectations for a December rate cut,” Sweet said.
