US GDP Grew by 2.0% in Q3

The government released its initial estimate for Q3 GDP growth. They said the economy grew at a 2% rate in Q3. That’s annualized and adjusted for inflation. This figure will be updated two more times.

A 2% rate of growth isn’t that good, even though it’s positive. This means that the post-pandemic rebound is most likely over. This was the slowest rate of growth since the second quarter of 2020. Wall Street had been expecting growth of 2.8%.

Declines in residential fixed investment and federal government spending helped hold back gains, as did a surge in the U.S. trade deficit, which widened to a near-record $73.3 billion in August.

The drops mostly offset increases in private inventory investment, a meager gain in personal consumption, state and local government spending, and nonresidential fixed investment.

Consumer spending, which makes up 69% of the $23.2 trillion U.S. economy, increased at just a 1.6% pace for the most recent period, after rising 12% in the second quarter.

Spending for goods tumbled 9.2%, spurred by a 26.2% plunge in expenditures on longer-lasting goods like appliances and autos, while services spending increased 7.9%, a reduction from the 11.5% pace in Q2.

The downshift came amid a 0.7% decline in disposable personal income, which fell 25.7% in Q2 amid the end of government stimulus payments. The personal saving rate declined to 8.9% from 10.5%.

Federal government spending fell by 4.7%, which the Commerce Department said was due to a halt in services and processing for the Paycheck Protection Program, a pandemic-era initiative aimed at providing bridge funding to businesses impacted by the shutdown.

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It’s too early to say we’re headed for a recession, but we won’t see the kind of numbers we saw in the four quarters prior to this.

Posted by on October 28th, 2021 at 12:31 pm


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