The US economy grew at a surprising pace in the third quarter of the year, as the world’s largest economy avoided the impact of the Federal Reserve’s interest rate hike.Thank you for reading this post, don't forget to subscribe!
The US economy grew at a 4.9 percent annual rate between July and September, much faster than the 4.2 percent expected by economists, according to new data published today.
That means growth was more than double the previous quarter’s 2.1 percent and the fastest rate of expansion in nearly two years.
Despite the monetary tightening so far, consumers have continued to drive performance in the US.
“Speeding up “Real gross domestic product in the third quarter reflected an uptick in consumer spending, private inventory investment and federal government spending, and an acceleration in exports and residential fixed investment,” the Bureau of Economic Analysis said.
Today’s blockbuster data follows a series of signals that the US economy continues to face pressure from the Fed’s rate hikes.
Last week’s data showed that consumers spent a lot of cash in the summer. Investors have also been surprised by the jobs report and stubborn inflation, which has pushed yields on US government debt to their highest level since 2007.
The Fed will meet next week to decide on interest rates, with the market widely expecting rates to be kept unchanged. Today’s data is unlikely to change the Fed’s mind, but continued strong growth could prompt another hike before the year ends.
Speaking yesterday, Fed Chair Jerome Powell said: “Additional evidence of continued above-trend growth, or that labor market tightness is no longer easing, could jeopardize further progress on inflation and further ease monetary policy.” “Tightening may be required”.