US GDP rose 2.6% in the third quarter

Then the US economy recovered in the third quarter Agreement In the first six months of the year, the trade deficit masked weakening consumer demand.

Gross domestic product grew 2.6 percent year-on-year between July and September, beating economists’ expectations and marking a sharp reversal from a 0.6 percent fall in the second quarter of 2022 and a 1.6 percent decline recorded in the first three months. of the year.

The expansion in the third quarter was driven by a narrowing of the trade deficit, as declining consumer demand reduced imports while exports rose. This comes despite an increase in commodity shortages in September, as a strong US dollar weighed on exports. Consumer spending advanced just 1.4 percent, much slower than in the previous period, a sign that the economy is starting to slow.

The data, released by the Commerce Department on Thursday, effectively ends that Discussion There were rumblings over the summer that the U.S. economy was already in recession, but that did little to dispel fears that it would eventually come to an end, given the aggressive steps the U.S. central bank is taking to control high inflation.

Two consecutive quarters of GDP growth have long been considered a common benchmark for so-called “technological recessions.” However, top policymakers in the Biden administration and the Federal Reserve forcefully pushed back on that framework, citing ample evidence that the economy is still on solid footing.

The official arbiters of a recession, the National Bureau of Economic Research’s panel of economists, characterize one as “a marked decline in economic activity that spreads throughout the economy and lasts for more than a few months.” They typically look at a range of metrics, including monthly jobs growth, consumer spending on goods and services, and industrial production.

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The central bank is poised to deliver a fourth consecutive 0.75 percentage point interest rate hike early next month, which would lift its key policy rate to a new target range of 3.75 percent to 4 percent. As recently as March, the federal funds rate was close to zero, making this tightening campaign one of the most aggressive in the history of the US central bank.

While the central bank may soon consider slowing the pace of its rate hikes, as soon as December, it is not expected to completely move away from tight monetary policy.

As of last month, most officials thought the Fed funds rate would be 4.6 percent, but now investors expect it to close at 5 percent next year.

Given how big the Fed’s actions are expected to be on growth and the labor market, most economists now expect the unemployment rate to rise from its current 3.5 percent and the economy to be in recession next year.

Top officials of the Biden administration to maintain The U.S. economy is strong enough to avoid that conclusion, citing a sluggish labor market.

“No one knows whether this process will lead to a recession or, if so, how significant that recession will be,” he said at his last press conference in September.

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