US consumer spending rose more than expected last September, keeping it on a higher growth path entering the fourth quarter, while monthly inflation rose.
The Bureau of Economic Analysis of the Department of Commerce reported on Friday that consumer spending, which represents more than two-thirds of US economic activity, rose by 0.7% last month, and data last August showed a rise in spending by 0.4%.
Economists polled by Reuters had expected spending to increase by 0.5%.
The third quarter GDP report – which was published yesterday, Thursday – included this data. The report showed that consumer spending accelerated sharply, contributing to the economy growing at the fastest pace in nearly two years.
While the strong growth rate in consumer spending is unlikely to be sustainable, the strong turnaround in the third quarter bodes well for fourth-quarter spending amid mounting challenges. Consumer spending is driven by strong wage growth, and families withdrawing what they saved during the Corona pandemic.
The Office of Economic Analysis of the Ministry of Commerce said – in its advance estimate of GDP growth in the third quarter – yesterday, Thursday, that it rose by 4.9%, which is the fastest pace since the last quarter of 2021.
The US economy grew by 2.1% in the second quarter of the year, at a pace much higher than what Federal Reserve (central bank) officials consider a non-inflationary growth rate of about 1.8%.
Financial markets expect the Federal Reserve to stabilize interest rates in the period from October 31 to the end of next November.
For its part, Bloomberg News Agency reported that the recent growth data confirms the continued steadfastness of the largest economy in the world in the face of high prices and the rapid rise in borrowing costs, which exceeded analysts’ expectations and allayed fears of a recession, adding that the main source of this flexibility in the American economy is Continued strength of the labor market and growth in domestic consumer spending.
2023-10-27 17:17:38
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