US GDP rises at 2.8% rate in third quarter

The US economy grew by an annualised rate of 2.8 per cent in the third quarter, a slight slowdown compared with the previous period but still reflecting powerful buyer spending.

The data on Wednesday from the Bureau of Economic Analysis showed GDP fell slightly short of economists’ estimates for a 3 per cent expansion and was just shy of the 3 per cent rate registered the previous quarter.

The continued strength was a reflection of the willingness of American consumers to keep opening their wallets, despite lingering worth rise pressures.

buyer spending accelerated to 3.7 per cent, while one closely watched proxy for demand that strips out inventories, trade and government spending — called final sales to domestic private purchasers — jumped to 3.2 per cent from 2.7 per cent in the last quarter. Residential property, however, slipped by 5.1 per cent.

“Where it counts, growth performed incredibly well in the third quarter,” said Tom Porcelli, chief US economist at PGIM Fixed profits. “It’s very challenging to really practically ponder of having a decline over the near to medium term.”

The data, which covers the period between July and September, confirms the strength of the globe’s largest economy, which has repeatedly defied expectations of a decline despite the Federal safety net holding gain rates high to stamp out worth rise.

The US central financial institution cut rates by a larger than usual half-point last month — its first reduction since 2020 — leaving the standard at 4.75 to 5 per cent.

Evidence of the US economy’s resilience comes just days before Americans vote to elect the country’s recent president. Kamala Harris, the Democratic vice-president, has touted the current administration’s handling of the economy, although her opponent Donald Trump has blamed it for worth rise and high living costs.

Even as worth rise has lingered, however, US buyer spending has remained robust, buoyed by the country’s well jobs trade. The unemployment rate has risen to 4.1 per cent from its multi-decade low of 3.4 per cent in 2023.

Economists declare the uptick in joblessness is due to more workers entering the labour trade because of higher immigration. That has helped ease wage pressures, and in turn worth rise, with limited damage to the jobs trade — bringing into sight a so-called soft landing for the economy as the Fed begins to cut rates.

The US has outperformed its peers among the globe’s strongest economies. The IMF recently projection growth from the US of 2.8 per cent this year and 2.2 per cent next year, versus 3.2 per cent in both years for the global economy as a whole. US buyer confidence has also been powerful, and hit a nine-month high in October, according to a update on Tuesday from the Conference Board.

The update showed that the proportion of consumers expecting a decline over the next 12 months fell to its lowest level since the question was first asked in July 2022. The percentage who thought the economy was already in a contraction also fell.

trade moves were muted following the release of Wednesday’s GDP data, with the policy-sensitive two-year gain up 0.03 percentage points to 4.15 per cent and the standard 10-year gain broadly flat at 4.27 per cent. Yields shift inversely to prices.

US ownership forward contracts were also little changed, with contracts tracking the S&P 500 flat an hour before the recent York opening bell.