The US GDP growth rate returned positive to 2.6% in the third quarter and the Fed’s anti-inflation took effect
The U.S. Bureau of Economic Analysis (BEA) reported Thursday that,The US economy turns positive for the first time in the third quarter of 2022, at least temporarily easing recession fears。
According to preliminary estimates,Combined GDP of all goods and services produced in the July-September period increased at an annualized rate of 2.6%, beating the Dow Jones forecast of 2.3%。
Several consecutive quarters of negative growth at the start of the year fit the accepted definition of a recession, although the National Bureau of Economic Research (NBER) is often seen as the arbiter of recessions and expansions.
Much of the increase is due to a narrowing of the trade deficit, which economists predict and see as a one-off phenomenon that will not recur in the coming quarters.。
GDP growth also resulted from the increase in consumer spending, non-residential fixed investment and public spending. The report reflects a shift towards spending on services rather than goods, which increased 2.8% while spending on goods fell 1.2%.
The increase was offset by the decline in residential fixed investment and private inventories, the BEA said.
Paul Ashworth, North American chief economist at Capital Economics, wrote: “Overall, while a 2.6% rebound in the third quarter reversed a crisis in the first half, weThis strong momentum is not expected to continue。 “”Exports will soon decline and domestic demand will be squeezed under the weight of higher interest rates.We expect the economy to enter a mild recession in the first half of next year。 “
Markets moved higher on the news, with the Dow Jones Industrial Average up more than 300 points at the start of Wall Street trading.
Other economic news on Thursday showed that jobless claims rose to 217,000 last week, but remained below expectations for 220,000. Additionally, durable goods orders rose 0.4% in September from the previous month, missing expectations of a 0.7% rise.
The report comes as politicians fight inflation. Currently, inflation in the United States is approaching its highest level in the past 40 years. The price spike was caused by a number of factors, many linked to the pandemic, but also by an unprecedented fiscal and monetary stimulus that is still operating through the financial system.
According to the BEA report,The economy slows in key areas, especially consumers and private investment。
Consumer spending, as measured by personal consumption spending, increased only 1.4% in the third quarter, down from 2% in the second quarter. Gross domestic private investment fell by 8.5%, continuing a decline of 14.1% in the second quarter. Residential investment, a measure of residential construction, fell sharply by 26.4% in the third quarter after falling 17.8% in the second quarter, reflecting a sharp slowdown in the housing market.
On the plus side, GDP-enhancing exports increased by 14.4%, while imports deducted from GDP decreased by 6.9%.Net exports of goods and services added 2.77% to overall exports, meaning GDP would have been substantially flat if it hadn’t.。
There is good news on the inflation front.
Cost of living measures adapted to consumer behavior:The chain-weighted price index rose 4.1% in the third quarter, well below the Dow Jones estimate of 5.3%, largely due to falling energy prices. Furthermore, the Fed’s key measure of inflation –The PCE price index rose 4.2%, down from 7.3% the previous quarter. Core prices, excluding food and energy, rose 4.5%, broadly in line with Wall’s expectations. Street。
Earlier this year, the Fed embarked on a series of rate hikes aimed at curbing inflation. The Fed has raised interest rates by 3 percentage points since March, taking them to the highest level since before the worst of the financial crisis. The purpose of rising interest rates is to slow the flow of money into the economy and dampen the labor market. The job-to-employment ratio is now close to 2 to 1, a situation that has caused wages to rise and lead to a wage-price spiral that economists fear will plunge the United States into recession.
Luke Tilley, chief economist of the Wilmington Trust, said: “Our fear of a recession does not necessarily come from these numbers, but from how much the Fed raises rates and how companies and consumers react.”
“Most encouragingly, consumer spending, employment and wages are still growing, which should help consumer spending,” he added. “Our biggest concern is a significant reduction in corporate hires.”
It is generally believed that,The U.S. central bank will approve a fourth consecutive 0.75 percentage point hike at next week’s meeting, but the pace of rate hikes may have slowed later as officials take time to assess the impact of the policy on economic conditions.. “The Fed will continue to make the mistake of over-tightening, which makes sense given the Fed’s desire to reduce the risk of entrenched inflation to high levels,” said Preston Caldwell, head of the US economy at Morningstar.After December, we could see a sharp slowdown in the pace of tightening.“
US dollar index daily chart
At 1:40 pm on October 28, Beijing time, the US dollar index was 110.4874
