2023-10-26 14:21:09
If we simply compare to the previous quarter, third quarter growth is 1.2%. It was, in the second quarter, 2.1% at an annualized rate, and 0.5% compared to the previous quarter. Because American households continued to consume, thus fueling the main engine of the American economy.
Rebound in the real estate market
“Real estate investment has also rebounded after the decline of the previous nine quarters,” notes Rubeela Farooqi, chief economist for High Frequency Economics, in a note. According to her, growth should continue in the fourth quarter, but at a “significantly” slower pace, due in particular to lower household spending: rate increases “should have a greater impact on consumers and businesses at the end of the year. future”. Already in the second quarter, the growth of the gross domestic product (GDP) of the United States had surprised by its strength.
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However, inflation has been reducing the purchasing power of households for two years. And the remedy could have turned out to be even worse, since the American central bank (Fed) wants to voluntarily slow down growth, to ease the pressure on prices. To do this, it has raised its rates 11 times since March 2022. They are now in the range of 5.25-5.50%, the highest since 2001. Result: interest rates have soared , and purchases were slowed down.
Nothing stops growth
Not enough, however, to stop growth. Because Americans have jobs, and therefore income. The lack of labor continues to pose a problem for employers, but seems to be starting to improve. The unemployment rate was 3.8% in September, and Joe Biden’s administration praises its economic policy which has allowed broad access to employment, including among the least advantaged populations. The wealthiest households still have savings, amassed during Covid. The famous “soft landing”, which would slow inflation without causing the unemployment rate to soar or plunging the economy into recession, now seems within reach.
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Inflation remained stable over one year in September in the United States, at 3.7%, according to the CPI index published by the Department of Labor, but slowed down over one month, for the first time since May. The PCE index, the Fed’s favorite, will be released on Friday. In 2022, the growth of American economic activity had slowed to 2.1%, after experiencing its highest rate in 2021 since 1984 (5.9%). In 2020, the United States experienced the largest decline in GDP since 1946 (-3.5%) and two months of recession due to Covid-19.
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