Economy Surged in Third Quarter, Growing at Annual Rate of 4.9%
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Economy Surged in Third Quarter
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Strong consumer and government spending helped drive the increase.
By Tim Smart
Oct. 26, 2023
By Tim Smart
Oct. 26, 2023, at 9:02 a.m.
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Economy Surged in Third Quarter
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Shoppers look over blankets on sale in a Costco warehouse on Aug. 24, 2023, in Sheridan, Colo. “Despite a bevy of headwinds, a resilient U.S. economy expanded at a 4.9% on a seasonally adjusted annualized pace and a 4% in household consumption,” Joseph Brusuelas, chief economist at RSM US, posted on social media. (David Zalubowski/AP-File)
The U.S. economy is on a roll, expanding at a 4.9% annual clip in the third quarter, the Bureau of Economic Analysis reported on Thursday.
It was the strongest quarterly performance since late 2021 when the economy rebounded from the lockdowns and other disruptions caused by the COVID-19 pandemic. Forecasts had called for an increase close to 5%.
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Megadeals Show It’s Still the Age of Oil
The increase was driven by an increase in consumer and government spending, private investment and exports, the report said. The advance estimate of a 4.9% rate compares to 2.1% in the second quarter.
“Despite a bevy of headwinds, a resilient U.S. economy expanded at a 4.9% on a seasonally adjusted annualized pace and a 4% in household consumption,” Joseph Brusuelas, chief economist at RSM US, posted on social media.
While many economists are still forecasting a slowdown for later this year and early in 2024, the economy’s recent performance shows its resilience in the face of high interest rates and a tight labor market.
But consumers have continued spending, buoyed by savings built up during the pandemic and a strong labor market with a 3.8% unemployment rate.
Political Cartoons on the Economy
It also makes life more difficult for the Federal Reserve when it meets next week to consider next steps in its campaign to bring inflation down to a 2% annual level. Consensus forecasts call for no change in interest rate policy from the Fed, but the continued strength of the economy may well put a rate hike on the table for the central bank’s December meeting.
“This quarter’s positive GDP growth, a sign that the economy has not fully slowed, will likely influence the Fed’s decision to decrease the size and frequency of rate hikes in the new year,” said Steve Rick, chief economist at TruStage. “ With two meetings left to go in 2023, all eyes are watching the Fed to determine where they will go next. Easing of hikes aside, we do expect interest rates to remain high well into 2024 as inflation remains stubbornly above their 2% target.”
In another upbeat reading on the economy, the Penta-CivicScience Economic Sentiment Index released on Wednesday showed an increase of 1 point to 33.1 over the past two weeks, rebounding after falling to its lowest point since October 2022. The gain was led by increased confidence in finding a job and improvement in personal finances.
New home sales in September came in much stronger than anticipated but were sparked by a decline in the median selling price. Still, the report was seen as bullish for the housing sector.
“New single-family home sales were stronger than consensus estimates as the sector has continued to improve,” said Raymond James Chief Economist Eugenio Aleman. “However, it is clear that home sellers have had to reduce prices to entice new home buyers, as both the median as well as average price of new homes came down considerably compared to a year earlier.”
MORE:
New Home Sales Rise as Prices Fall
On Friday, the Labor Department will issue the personal consumption expenditures price index for September. The metric is one the Fed follows closely, especially the core index that excludes energy and food costs. Analysts are looking for the overall index to show prices increased at a 3.4% annual rate and the core index at 3.7%, down from 3.5% and 3.9%, respectively.
On Wednesday, Adobe Analytics issued its monthly measure of online prices showing they continue to fall, hitting a 41-month low in September.
“Online prices in September 2023 fell 4.6% year-over-year, a 41-month low and marking over a year of YoY price decreases,” the web-tracking firm said. “Online prices fell for the majority of Adobe’s tracked categories (12 of 18) on an annual basis. On a month-over-month basis, online prices were down 0.6%.”
Key economic data on the labor market for September is scheduled for next week, with reports on job openings and the monthly employment report from the Labor Department. Last month, the number of new jobs created, 336,000, was almost twice the forecast.
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Skip to content. News. News Sections Cartoons Top Stories Health News Politics New York World Report Business News Coronavirus Games. Best Countries Home Overall Rankings Rankings Index Countries Index Data Explorer News Resources Methodology FAQ Download 2023 Rankings. Best States Home Overall Rankings 2023 Gender Equality 2022 Rankings Index States Index Coronavirus Data Data Explorer News Resources Methodology FAQ Download 2023 Rankings. Healthiest Communities Home Overall Rankings Urban, High-Performing Urban, Up-and-Coming Rural, High-Performing Rural, Up-and-Coming Coronavirus Data Data Explorer News Resources Methodology FAQ. Opinion. Elections. Racial Equality in America. Photos. U.S. News Live. The Report. Sign In. Economy Surged in Third Quarter. Economy. News. Home. Strong consumer and government spending helped drive the increase. By Tim Smart. Oct. 26, 2023. By Tim Smart. Oct. 26, 2023, at 9:02 a.m. Save. Comment. More. Economy Surged in Third Quarter. More. Shoppers look over blankets on sale in a Costco warehouse on Aug. 24, 2023, in Sheridan, Colo. “Despite a bevy of headwinds, a resilient U.S. economy expanded at a 4.9% on a seasonally adjusted annualized pace and a 4% in household consumption,” Joseph Brusuelas, chief economist at RSM US, posted on social media. (David Zalubowski/AP-File) The U.S. economy is on a roll, expanding at a 4.9% annual clip in the third quarter, the Bureau of Economic Analysis reported on Thursday. It was the strongest quarterly performance since late 2021 when the economy rebounded from the lockdowns and other disruptions caused by the COVID-19 pandemic. Forecasts had called for an increase close to 5%. READ: Megadeals Show It’s Still the Age of Oil. The increase was driven by an increase in consumer and government spending, private investment and exports, the report said. The advance estimate of a 4.9% rate compares to 2.1% in the second quarter. “Despite a bevy of headwinds, a resilient U.S. economy expanded at a 4.9% on a seasonally adjusted annualized pace and a 4% in household consumption,” Joseph Brusuelas, chief economist at RSM US, posted on social media. While many economists are still forecasting a slowdown for later this year and early in 2024, the economy’s recent performance shows its resilience in the face of high interest rates and a tight labor market. But consumers have continued spending, buoyed by savings built up during the pandemic and a strong labor market with a 3.8% unemployment rate. Political Cartoons on the Economy. It also makes life more difficult for the Federal Reserve when it meets next week to consider next steps in its campaign to bring inflation down to a 2% annual level. Consensus forecasts call for no change in interest rate policy from the Fed, but the continued strength of the economy may well put a rate hike on the table for the central bank’s December meeting. “This quarter’s positive GDP growth, a sign that the economy has not fully slowed, will likely influence the Fed’s decision to decrease the size and frequency of rate hikes in the new year,” said Steve Rick, chief economist at TruStage. “ With two meetings left to go in 2023, all eyes are watching the Fed to determine where they will go next. Easing of hikes aside, we do expect interest rates to remain high well into 2024 as inflation remains stubbornly above their 2% target.” In another upbeat reading on the economy, the Penta-CivicScience Economic Sentiment Index released on Wednesday showed an increase of 1 point to 33.1 over the past two weeks, rebounding after falling to its lowest point since October 2022. The gain was led by increased confidence in finding a job and improvement in personal finances. New home sales in September came in much stronger than anticipated but were sparked by a decline in the median selling price. Still, the report was seen as bullish for the housing sector. “New single-family home sales were stronger than consensus estimates as the sector has continued to improve,” said Raymond James Chief Economist Eugenio Aleman. “However, it is clear that home sellers have had to reduce prices to entice new home buyers, as both the median as well as average price of new homes came down considerably compared to a year earlier.” MORE: New Home Sales Rise as Prices Fall. On Friday, the Labor Department will issue the personal consumption expenditures price index for September. The metric is one the Fed follows closely, especially the core index that excludes energy and food costs. Analysts are looking for the overall index to show prices increased at a 3.4% annual rate and the core index at 3.7%, down from 3.5% and 3.9%, respectively. On Wednesday, Adobe Analytics issued its monthly measure of online prices showing they continue to fall, hitting a 41-month low in September. “Online prices in September 2023 fell 4.6% year-over-year, a 41-month low and marking over a year of YoY price decreases,” the web-tracking firm said. “Online prices fell for the majority of Adobe’s tracked categories (12 of 18) on an annual basis. On a month-over-month basis, online prices were down 0.6%.” Key economic data on the labor market for September is scheduled for next week, with reports on job openings and the monthly employment report from the Labor Department. Last month, the number of new jobs created, 336,000, was almost twice the forecast. Join the Conversation. See Comments. Tags: economy , GDP , consumers. Read More. Galleries. Elections. Political Cartoons on Joe Biden. Photos. War in Israel and Gaza. Photos. Joe Biden Behind The Scenes. Photos. Photos You Should See - Nov. 2023. Health News Bulletin. Stay informed on the latest news on health and COVID-19 from the editors at U.S. News & World Report. Sign in to manage your newsletters » Sign up to receive the latest updates from U.S News & World Report and our trusted partners and sponsors. By clicking submit, you are agreeing to our Terms and Conditions & Privacy Policy . You May Also Like. The 10 Worst Presidents Not all U.S. presidents are missed once they leave the White House. U.S. News Staff July 6, 2021. Cartoons on President Donald Trump Feb. 1, 2017, at 1:24 p.m. Photos: Obama Behind the Scenes A collection of moments during and after Barack Obama's presidency. April 8, 2022. Photos: Who Supports Joe Biden? The former vice president has become the Democratic front-runner with primary victories across the country. March 11, 2020. Fed Remains on Inflation Watch There was little to suggest the Federal Reserve will cut interest rates anytime soon, despite market hopes. Tim Smart Nov. 21, 2023. Debate Dates Set – But No Candidates Yet Neither party’s anticipated nominee has committed to attend, in what would be a seismic shift in the decades of custom surrounding presidential elections. Kaia Hubbard Nov. 21, 2023. Existing Home Sales Slide in October Although home sales fell, prices increased by 3.4%. Tim Smart Nov. 21, 2023. The Week in Cartoons Nov. 20-24 America marks Thanksgiving with a strong economy as Republicans and Democrats trade fire in the race for the White House. Nov. 21, 2023, at 4:06 p.m. Leading Indicators Signal Recession The Conference Board’s index for October remains in a downward trend. Tim Smart Nov. 20, 2023. A Thankful Economy Despite the negative sentiment of consumers, the economy has outperformed in 2023 and looks set to close on a happy note. Tim Smart Nov. 20, 2023. Best Countries. 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