US economy grew faster in third quarter than first estimated

A woman shops at a grocery store in Glenview, Ill.
AP Photo/Nam Y. Huh
A woman shops at a grocery store in Glenview, Ill., Saturday, Nov. 19, 2022. Americans are bracing for a costly Thanksgiving this year, with double-digit percent increases in the price of turkey, potatoes, stuffing, canned pumpkin and other staples.

The U.S. economy grew at a faster rate between July and September than federal officials first estimated, according to federal data released Wednesday.

U.S. gross domestic product (GDP) grew at an annualized rate of 2.9 percent during the third quarter, according to a second estimate released Wednesday by the Bureau of Economic Analysis (BEA). The third quarter growth rate was revised 0.3 percentage points higher than the 2.6 percent annualized increase in GDP the BEA’s “advance” estimate in October.

The BEA releases three estimates of GDP growth for each economic quarter: the “advance” estimate based on early data, a second estimate using more complete data, and a final third estimate.

The agency said it revised third-quarter GDP growth higher after new data showed higher levels of consumer spending and business investment between July and September. The U.S. also imported less in goods and services during the third quarter than first believed, which lifted GDP growth.

“This means the largely consumer-led rebound in the third quarter was firmer than expected,” Cailin Birch, global economist at the Economist Intelligence Unit, said in a Wednesday analysis.

“However, this key component of GDP is showing some signs of weakening,” he continued, citing a decline in spending on goods and higher levels of household debt.

While the third-quarter growth spurt helped quash fears the U.S. is currently in a recession, many economists still believe the economy is likely to hit one early next year. High inflation and steep Federal Reserve interest rate hikes have already slowed key sources of growth and could push the U.S. into reverse as soon as the fourth quarter.

Final sales to private domestic purchasers — or, the money American households and businesses spend on U.S.-made goods and services — rose just 0.5 percent in the third quarter, according to revised estimates. The surge of exports that helped fueled the third-quarter growth comeback will also evaporate as Europe falls deeper into recession.

“Beneath the apparent strength, the underlying details of the [report] continue to paint the picture of a slowing economy with domestic demand stalling under the weight of elevated inflation and the most aggressive tightening cycle by the Federal Reserve since the 1980s,” Gregory Daco, chief economist at EY-Parthenon, said in a Wednesday analysis.

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