The U.S. Department of Commerce released data on Thursday (22nd) showing that the U.S. real gross domestic product (GDP) grew at a final quarterly rate of 3.2% in the third quarter, compared with the previous revised and initial values of 2.9% and 2.6%, respectively. Previously, the U.S. GDP fell for two consecutive quarters, and the economy fell into a technical contraction. However, in the third quarter, the economy achieved positive growth driven by exports and consumption, but it also meant that inflation risks increased.
The Commerce Department said third-quarter GDP growth primarily reflected growth in exports, consumer spending, nonresidential fixed investment, state and local government spending, and federal government spending, which were partially offset by declines in residential fixed investment and private inventory investment.
Specifically, industrial supplies, raw materials (especially non-durable goods) and tourism were the main contributors to export growth, while consumer spending growth was mainly driven by health care, and non-residential fixed investment growth was driven by equipment and intellectual property products Driven by increases in state and local government spending, mainly due to higher structural investment and employee wages, the increase in federal government spending was boosted by defense spending.
In terms of industries, the GDP of the service industry grew by 4.9%, the government grew by 0.6%, and the commodity production industry fell by 1.3%. Overall, 16 of the 22 industries contributed to the real GDP growth in the third quarter. Also, interest-sensitive real estate investments are shrinking at an annual rate of 27.1% as the Federal Reserve (Fed) has raised interest rates seven times this year.
Although US GDP grew sharply in the third quarter, it also meant higher inflation. In the third quarter, the personal consumption expenditures (PCE) price index increased at a final quarterly rate of 4.7%, which was higher than the revised value of 4.6% and the initial value of 4.5%. The market expects the Federal Reserve (Fed) to raise interest rates.
The preliminary value of the fourth quarter GDP of the United States will be announced in January next year, and the market predicts that the US economy will achieve positive growth once more in the fourth quarter, but the growth rate will slow down to 1%.
In addition, many economists believe that the U.S. economy will fall into recession next year under the pressure of the Fed raising interest rates to fight inflation. The Bank of America predicts that GDP will decline by 0.4% in the first quarter of next year.
At the same time, the Fed is more pessimistic regarding the U.S. economy next year. In the economic forecast released this month, the Fed slightly raised the real GDP growth rate of the U.S. this year from 0.2% in September to 0.5%. It was revised down by 0.7 percentage points to 0.5%.
