U.S. News
US economy grew fastest in nearly 2 years in Q3
By CM Chaney · October 28, 2023
In brief…
- US economy grew fastest in nearly 2 years in Q3 with 4.9% GDP increase
- Consumer spending jumped 4% after rising just 0.8% last quarter
- Comes after summer's record turnout for concerts, movies amid recession fears
- Follows strong September jobs gains; jobless claims rose slightly
- But Mastercard signals slowing spending in Oct. amid economic uncertainty
The U.S. economy grew at its fastest pace in nearly two years during the third quarter thanks to a surge in consumer spending, according to preliminary Commerce Department figures released Thursday.
Gross domestic product increased 4.9% annually from July-September, jumping up from 2.1% growth in the second quarter. It was the largest expansion since the fourth quarter of 2021.
Consumer spending rose 4%, up from just 0.8% last quarter, as Americans maintained robust spending despite recession fears. This summer saw record turnout for concerts, movies and more.
The data comes ahead of the Federal Reserve’s next policy meeting in two weeks, where it will decide whether to adjust benchmark interest rates. High spending has driven inflation, prompting relentless Fed hikes to raise borrowing costs. The Fed is now expected to hold rates at a 22-year high.
Increases in consumer spending, private investment, exports, and government spending drove the GDP growth, the Commerce Department said.
U.S. stocks mostly opened lower Thursday, with the Nasdaq dropping 0.4% and the S&P dipping 0.2%.
The third quarter growth follows strong September jobs gains, typically indicating economic strength. Jobless claims rose slightly last week but remain low overall.
But signs suggest the spending spree may soon end.
Mastercard stocks slipped Thursday after its earnings call signaled slowing spending in October, forecasting weaker fourth quarter growth amid economic uncertainty.