WASHINGTON–New numbers reveal an economy that grew faster than many expected in the third quarter, with one CU economist saying the data worries over a potential slowdown can be set aside for now.
According to the Commerce Department, gross domestic product rose at a seasonally and inflation-adjusted 4.3% annual rate for the July through September quarter, the highest growth rate in two years. The growth was driven by robust spending by consumers on services like healthcare as well as spending on recreational vehicles.
Growth picked up from 3.8% in the previous quarter.
““Third quarter GDP surprised to the upside and the mix of growth was broad and healthy. Questions remain as to whether households can continue to power growth as consumption outpaced income,” Curt Long, chief economist with America’s Credit Unions, said in a statement. “But this is a positive report that will ease concerns of a looming slowdown, and credit unions stand ready to support their members to take advantage of a more favorable economic environment—whether that’s in the form of helping consumers better plan for the future, opening new businesses, or preparing to make important purchases for themselves and their families.”
The Data Points
Among the data points in the new Commerce report:
- The pace of business investment cooled to 2.8% from 7.3% in the prior quarter.
- Consumer spending grew at an annual rate of 3.5% in the third quarter, picking up from 2.5% in the previous quarter.
- Investment in both equipment and intellectual property, which includes artificial intelligence-related spending, rose at a 5.4% pace. Growth in both categories slowed from the prior quarter.
- Trade boosted the third-quarter headline GDP number by 1.59 percentage points, as exports jumped and imports continued to decline.
- Inflation picked up as the economy grew strongly last quarter. The report showed prices excluding volatile food and energy categories rose an annualized 2.9% in the third quarter, picking up from 2.6% in the second quarter.
