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The US economy expanded 3.2 percent in the third quarter, the Commerce Department said Thursday, in a further upward revision of data reflecting stronger consumer spending and investment than earlier estimated. online news
The world’s biggest economy grew for the first time this year in the July to September period, after two quarters of contraction that worsened recession fears.
It earlier revised the GDP figure to 2.9 percent, annualized — already an improvement from the 2.6 percent first reported in October.
Both adjustments “primarily reflected upward revisions to consumer spending” as well as non-residential fixed investment, the Commerce Department said, in its final GDP estimate for the quarter.
But growth was partly offset by decreases in residential fixed investment and private inventory investment, it added.
Within consumer spending, a rise in services was partly held back by a drop in goods — sales of cars and auto parts lagged as did food and beverage purchases, as households grappled with soaring costs.
An increase in government spending was led by upticks in staff compensation and defense spending, the Commerce Department said.
The data also showed that personal consumption expenditures picked up 2.3 percent, markedly higher than the 1.7 percent previously estimated.
But it is unclear how long consumers will be able to keep up the current pace of spending.
“Despite a rapid increase in interest rates, the economy is growing and importantly, households are still spending,” said Rubeela Farooqi of High Frequency Economics in a note.
The Federal Reserve has raised interest rates seven times this year in an attempt to tamp down decades-high inflation, walking a tightrope to try to cool the economy without triggering a recession.
While effects of the higher rates are rippling across sectors, consumer spending has proven more resilient than expected.
But analysts point to signs that households are dipping into their savings, predicting a slower growth path in the future.
“In 2023, we expect a slower growth trajectory,” said Farooqi.
“In terms of Fed policy, even as growth slows… a focus on lowering inflation means rates will remain higher for longer next year,” she said.
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Notes from APS Radio News
Earlier this month, the Labor Department released its summary report on the Consumer Price Index:
CONSUMER PRICE INDEX – NOVEMBER 2022
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in November on a seasonally
adjusted basis, after increasing 0.4 percent in October, the U.S. Bureau of Labor Statistics reported
today. Over the last 12 months, the all items index increased 7.1 percent before seasonal adjustment.
The index for shelter was by far the largest contributor to the monthly all items increase, more than
offsetting decreases in energy indexes. The food index increased 0.5 percent over the month with the
food at home index also rising 0.5 percent. The energy index decreased 1.6 percent over the month as
the gasoline index, the natural gas index, and the electricity index all declined.
The index for all items less food and energy rose 0.2 percent in November, after rising 0.3 percent
in October. The indexes for shelter, communication, recreation, motor vehicle insurance, education,
and apparel were among those that increased over the month. Indexes which declined in November include
the used cars and trucks, medical care, and airline fares indexes.
The all items index increased 7.1 percent for the 12 months ending November; this was the smallest
12-month increase since the period ending December 2021. The all items less food and energy index rose
6.0 percent over the last 12 months. The energy index increased 13.1 percent for the 12 months ending
November, and the food index increased 10.6 percent over the last year; all of these increases were
smaller than for the period ending October.