The Commerce Department estimated economic growth in the third quarter at a 3.2% annualized pace, marking an upward revision from 2.9%.
Real gross domestic product, the sum of all final goods and services produced in the economy, increased between July and September following two straight quarters of decline. The agency’s first estimate, which was released in October, placed growth at 2.6%.
“The updated estimates primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment,” according to data from the agency. Overall increases came from higher “exports, consumer spending, nonresidential fixed investment, state and local government spending, and federal government spending, that were partly offset by decreases in residential fixed investment and private inventory investment.”
Economists had predicted that growth in the quarter would be 1.4%, with real output growth of 1.6% for 2022 and 1.3% for 2023, according to a report from the Federal Reserve Bank of Philadelphia. Executives surveyed by Business Roundtable forecast 1.2% growth for next year, a figure well below the 2.3% growth recorded in 2019.
More recently, however, consumer spending in the United States posted a decline. American retail expenditures fell 0.6% between October and November, according to data released by the Census Bureau. Households spent $689.4 billion in November on retail and food services, adjusted for seasonal variation and holiday differences, according to advance estimates.
Data indicate that current consumer spending occurs as households use savings and debt to make purchases. The total level of consumer loans increased from $1.5 trillion at the beginning of Biden’s tenure to $1.8 trillion as of last month, according to data from the Federal Reserve.
The labor market, however, has remained strong for the past two years despite the economic volatility. Total nonfarm employment increased by 263,000 last month, surpassing analysts’ expectations of 200,000 new positions as the unemployment rate was unchanged from the previous month at 3.7%.
Officials at the Federal Reserve are eyeing key economic data as they seek to end nearly three years of aggressive monetary stimulus, including near-zero target interest rates and the purchase of government securities from market actors, which had been established in response to the lockdown-induced recession. Policymakers raised rates by three-quarters of a percentage point on four consecutive occasions before they announced a half-percent increase this month, raising the cost of borrowing money for consumers and businesses.
White House officials have downplayed inflationary pressures and other economic turmoil. After the release of the preliminary third quarter output forecast, Biden claimed that “doomsayers” had been “rooting for a downturn” while falsely arguing that the nation had been in a recession.
Despite rising price levels and supply chain bottlenecks, the United States is comparatively more robust than other major economies, as Europe struggles with energy shortages and China suffers from strict government lockdowns. The dollar reached parity with the euro this year for the first time in two decades.
The International Monetary Fund currently predicts that the global economy will expand 3.2% in 2022 and 2.7% in 2023, marking “the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic.”