U.S. Economic Growth Accelerates More Than Expected In Q3
U.S. economic growth accelerated by more than expected in the third quarter of 2023, according to a report released by the Commerce Department on Thursday.
The Commerce Department said gross domestic product spiked by 4.9 percent in the third quarter after jumping by 2.1 percent in the second quarter. Economists had expected GDP to surge by 4.2 percent.
The stronger than expected GDP growth partly reflected a surge in consumer spending, which soared by 4.0 percent in the third quarter after climbing by 0.8 percent in the second quarter.
Private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment also increased.
The positive contributions were partly offset by a decrease in nonresidential fixed investment as well as an increase in imports, which are a subtraction in the calculation of GDP.
The Commerce Department also said the acceleration in GDP growth compared to the previous quarter reflected accelerations in consumer spending, private inventory investment, and federal government spending and upturns in exports and residential fixed investment.
These movements were partly offset by a downturn in nonresidential fixed investment, a deceleration in state and local government spending and an upturn in imports.
“There will be many people who will try to overlook this good news by calling it “temporary” (or transitory), but regardless of all of the negativity, consumers are spending, businesses are re-stocking their inventories in anticipation of future spending and the United States is leading the world in a post-pandemic economy,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.
“American consumers are rightly worried about inflation and even if the Fed is able to bring the inflation rate back down to their 2% target, prices are never going back to the levels at which we were all used to before the pandemic,” he added. “That is the conundrum for policy makers: growth is booming, jobs are plentiful, people are spending, and yet there is broad-based unhappiness and negativity about the economy.”
On the inflation front, the report said the personal consumption expenditures price index surged by 2.9 percent in the third quarter after jumping by 2.5 percent in the second quarter.
Meanwhile, the core PCE price index, which excludes food and energy prices, shot up by 2.4 percent in the third quarter after spiking by 3.7 percent in the second quarter.
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