After starting the year with two consecutive quarters of negative economic growth, the U.S. economy has turned it around in the third quarter. Real gross domestic product increased at an annual rate of 2.6%, according to the advanced estimate by the Bureau of Economic Analysis.
The positive growth follows the second quarter’s 0.6% contraction and first quarter’s 1.6% negative growth. The government said GDP was buoyed by a surge in exports and increases in consumer spending and government spending. Economists warn that the significant lift delivered by trade is likely unsustainable.
The numbers come as Americans are increasingly worried about a future recession. Despite the economic growth, the third quarter, which runs from July to September, was a bit of a mixed bag.
Inflation is still running around four-decade highs, with consumer prices increasing at an annual rate of 8.2% in September, down from this year’s peak of 9.1%. But core prices, which strip out food and energy, climbed to new heights in September at 6.6%, the highest reading in four decades.
Meanwhile, the Federal Reserve’s efforts to fight inflation by hiking rates have slammed the housing market and stocks, which are on track for their worst year since the 2008 financial crash.
And while investors had hoped the market conditions might lead to a Fed pivot in 2023, board members have so far rebuffed those calls, insisting the Fed has no plans to cut rates next year as it stays singularly focused on its No. 1 fight: inflation.
In spite of the Fed’s restrictive efforts, the U.S. labor market has remained persistently strong, falling back down to 3.5% unemployment in September, matching a five-decade low. The U.S. added 263,000 jobs that month and wages are still climbing.
Meanwhile, the tech sector could be looking to increase layoffs this next quarter as earnings for Big Tech show disappointing profit declines. Facebook parent company Meta’s stock plunged more than 23% Thursday morning after investors digested the company’s 4% revenue decline and 52% profit decline.