The U.S. recorded a surprise growth rate in the third quarter. Analysts say that consumers are likely to fall into a recession due to prolonged high-interest rates after the fourth quarter as they opened their wallets.
The U.S. Department of Commerce announced on the 26th (local time) that GDP growth in the third quarter of this year was 4.9%. Despite the continued high prices and high interest rates, consumers opened their wallets, showing stronger growth than market forecasts.
The Wall Street Journal quoted the U.S. Department of Commerce announcement as saying, “Economists earlier predicted that the economy would shrink somewhat this summer due to the Federal Reserve’s tightening policy, but growth was much stronger than expected due to strong consumption.” The 4.9% figure is a significant jump from the growth rate (2.1%) in the second quarter and the highest level since the fourth quarter of 2021 (7.0%). It also exceeded the third-quarter forecast (4.7%) of experts compiled by WSJ.
The increase in consumption during the summer vacation season is considered to be the main reason for the growth rate in the third quarter. The growth rate of personal consumption was 4.0%, up sharply from the second quarter (0.8%). Earlier, Wall Street analyzed that popular singers Taylor Swift and Beyoncé’s touring performances and the movie “Barbenheimer (Barbie, Oppenheimer)” craze have remarkably boosted consumption in the United States.
Excess savings and high employment sectors accumulated during the pandemic also supported the growth. The number of jobs in the non-agricultural sector in the U.S. increased by 336,000 in September, far exceeding market expectations (170,000), and retail sales rose 0.7% in the same month from last month, exceeding market expectations.
However, it is unclear whether this growth will continue after the fourth quarter. This is because consumption could gradually shrink due to the subsequent high interest rates and high prices. The recent surge in long-term government bond interest rates could also adversely affect growth. WSJ pointed out, “The Russia-Ukraine war, the Middle East crisis, and the possibility of a U.S. government shutdown could also cause cracks in the U.S. economy.”