The US economy surprises with a strong summer quarter
The US GDP is surprisingly increasing. However, experts expect a slowdown in the fourth quarter.
The upward revision to the growth figure reflects increased investment in the business.
Photo: Natalie Forbes/Getty Images
Despite tight monetary policy, the US economic engine accelerated stronger in the summer than expected. The US Commerce Department announced in a second estimate on Wednesday that gross domestic product rose 5.2% year over year in the July-September period. Preliminary figures indicate only 4.9%. Experts polled by Reuters had now expected a figure of 5.0%, after a 2.1% increase in the spring. However, economists expect the economy to cool significantly in the fourth quarter.
Christopher Waller, the US monetary authority, who recently began a discussion about the Federal Reserve cutting interest rates next year, estimates an increase of “one to two percent” for the current quarter. Maybe the jump in growth in the summer was strange.
The upward revision to the growth figure reflects increased business investment as well as government spending. However, at 3.6%, consumers did not increase their spending as much as initially reported. The initial estimate was 4.0%.
According to economists at Deutsche Bank, the US economic outlook is likely to deteriorate further next year: they assume that the US economy will slide into a “moderate recession” in the first half of 2024. Consumers, who fueled growth in the summer, are likely to retain their enthusiasm for spending. With their money. If inflation also falls, the central bank will have “considerable scope” to cut interest rates in this scenario, according to senior economists at Deutsche Bank.
The Fed has not touched interest rates for two consecutive meetings. Monetary authorities kept the key monetary policy interest rate in the range of 5.25 to 5.50% at the beginning of the month. Now you want to act more cautiously after a strong series of increases. Financial markets expect a decline in interest rates that will last for several months, which could be followed by a first step in bearish monetary policy.
Reuters
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