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Washington (AFP) – The U.S. economy returned to growth in the third quarter, after contracting the previous two quarters, offering Joe Biden a temporary respite ten days before the midterm elections, but the onset of a recession may not be only a matter of time.
Over the three months from July to September, the gross domestic product of the United States grew by 2.6% at an annualized rate, according to the first estimate of the Department of Commerce published Thursday.
The world’s largest economy is therefore growing for the first time since the start of 2022, and the rebound is stronger than expected, since analysts were expecting GDP growth of 2.3%.
GDP contracted in the first two quarters of the year, falling by 1.6% then by 0.6%. Without falling into recession at this stage, however, according to the Biden administration, but also many economists.
Because although these two consecutive quarters of decline in GDP correspond to the commonly accepted definition of a recession, the solidity of the job market in particular does not allow the world’s largest economy to enter this box.
These figures show “still positive momentum in household spending, a rebound in business investment but persistent weakness in residential investment,” commented Rubeela Farooqi, economist for HFE, in a note.
Force you dollars
However, she warns, “Looking ahead, risks are on the downside, particularly for consumption, as households continue to face headwinds from high prices and a likely slowdown in oil growth. use”.
Especially since “the strength of the dollar and the weakness of global growth will limit exports”, also anticipates Ian Shepherdson, economist for Pantheon Macroeconomics.
The calculation of GDP at an annualized rate, a measure favored by the United States, compares to the previous quarter and then projects the evolution over the entire year.
Growth is 0.6% if we simply compare to the previous quarter, as do other advanced economies, the countries of the euro zone for example, like France whose GDP, published on Friday, is expected to show very slight growth, at +0.2%.
And comparing the GDP of the 3rd quarter of 2022 to that of the 3rd quarter of 2021, as China does, American growth is 1.8%, against 3.9% for its Asian competitor.
Mid-term elections
This rebound is good news for President Joe Biden, ten days before the midterm elections, which could deprive him of his Democratic majority in Congress. The country’s economic situation has in fact undermined the upturn that the Democratic camp enjoyed until recently in the polls.
But the risks of recession remain for the months to come. Joe Biden himself had mentioned at the beginning of the month the possibility of a “very slight recession”.
In question? Inflation, which remains close to its highest level in 40 years, at 8.2% over one year in September in the United States. And reduces the purchasing power of households.
Especially since the remedy for this rise in prices is to slow down the economy by raising interest rates.
Home or consumer loans now cost a lot more than there used to be. Less consumption, less investment, should make it possible to cool an overheated economy.
It is the American central bank (Fed) which has the cards in hand to fight against inflation. It is gradually raising its rates, to encourage commercial banks to do the same when granting loans.
After four increases already, it should continue this momentum at its next meeting, Tuesday and Wednesday.
And the slowdown could be global, while inflation is high in very many regions. Several developed countries could thus experience a recession in 2023, such as Germany and Italy, the International Monetary Fund (IMF) recently warned.
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