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WASHINGTON (AP) — The U.S. economic system grew at a wholesome 2.8% annual price from July by September, with shoppers serving to drive progress regardless of the burden of still-high rates of interest.
Wednesday’s report from the Commerce Division mentioned the gross home product — the economic system’s complete output of products and providers — slowed barely from its 3% progress price within the April-June quarter. However the newest figures nonetheless replicate stunning sturdiness simply as Individuals assess the state of the economy within the closing stretch of the presidential race.
The report is the primary of three estimates the federal government will make of GDP progress for the third quarter of the yr. The U.S. economic system has continued to develop within the face of the much higher borrowing rates the Federal Reserve imposed in 2022 and 2023 in its drive to curb inflation. Regardless of widespread predictions that the economic system would succumb to a recession, it has stored rising, with employers nonetheless hiring and shoppers nonetheless spending.
In an indication that the nation’s households, whose purchases drive a lot of the economic system, will proceed spending, the Convention Board mentioned Tuesday that its consumer confidence index posted its greatest month-to-month achieve since March 2021. The proportion of shoppers who anticipate a recession within the subsequent 12 months dropped to its lowest level because the board first posed that query in July 2022.
On the similar time, the nation’s once-sizzling job market has misplaced some momentum. On Tuesday, the federal government reported that the variety of job openings in the US fell in September to its lowest level since January 2021. And employers have added a mean of 200,000 jobs a month thus far this yr — a wholesome quantity however down from a file 604,000 in 2021 because the economic system rebounded from the pandemic recession, 377,000 in 2022 and 251,000 in 2023.
On Friday, the Labor Division is anticipated to report that the economic system added 120,000 jobs in October. That achieve, although, will most likely have been considerably held down by the consequences of Hurricanes Helene and Milton and by a strike at Boeing, the aviation large, all of which briefly knocked 1000’s of individuals off payrolls.
At its most up-to-date assembly final month, the Fed was glad sufficient with its progress in opposition to inflation — and anxious sufficient by the slowing job market — to slash its benchmark price by a hefty half percentage point, its first and largest price reduce in additional than 4 years. When it meets subsequent week, the Fed is anticipated to announce one other price reduce, this one by a extra typical quarter-point.
The central financial institution’s policymakers have additionally signaled that they anticipate to chop their key price once more at their closing two conferences this yr, in November and December. And so they envision 4 extra price cuts in 2025 and two in 2026. The cumulative results of the Fed’s price cuts, over time, will possible be decrease borrowing charges for shoppers and companies.
Inflation, which reached a four-decade excessive of 9.1% in June 2022, has tumbled to 2.4%, barely above the Fed’s 2% goal. However common costs nonetheless far exceed their pre-pandemic ranges, which has exasperated many Individuals and posed a problem to Vice President Kamala Harris’ presidential prospects in her race in opposition to former President Donald Trump. Most mainstream economists have recommended, although, that Trump’s coverage proposals, in contrast to Harris’, would worsen inflation.
