The US economy has performed better than anticipated, as consumers continue to spend despite rising prices and borrowing costs.
After two consecutive quarters of contraction, the economy returned to growth in the three months ending in September, expanding at an annual pace of 2.6%.
This is one of the last significant economic assessments before the US midterm elections next month.
Many observers believe the United States will continue to experience a slowdown in the coming year.
The Commerce Department said that an increase in exports contributed to the gain in the most recent quarter.
As a result of a strong dollar and a poor global economy, it is more difficult for U.S. corporations to sell abroad, according to analysts.
And consumer spending, while resilient, is decelerating, increasing 1.4% in the September quarter compared to 2% in the preceding quarter.
Andrew Patterson, an international economist for the investment firm Vanguard, stated, “There’s more to it than the headline number.”
A substantial proportion of the population already feels that the U.S. economy has entered a recession.
Concerns have put the Democratic Party on the defense as they vie for control of Congress with the Republican Party.
President Joe Biden applauded the data on Thursday, calling it “more proof that our economic recovery is continuing to advance.”
The White House has argued that a lull in economic activity following the reopening of the economy during the pandemic is part of a healthy economic transition.
The employment market has remained robust and the unemployment rate is at record lows.
However, prices are rising at a rate not seen since the 1980s, reducing people’s purchasing power and causing the US central bank to attempt to chill the economy and stabilize the situation.
Since March, the Federal Reserve has increased interest rates five times, driving up borrowing prices at the quickest rate in decades.
The actions have impacted stock markets and precipitated a rapid slowdown in the housing industry, where activity is highly correlated with interest rates.
According to the Commerce Department, housing market activity, including construction, decreased by 26% in the third quarter.
As the effects of increasing interest rates are typically felt with a lag, many analysts anticipate a further downturn.
The majority of economists surveyed by the National Association for Business Economics (Nabe) anticipated that the US economy would enter a recession next year. This is characterized as a large, market-wide fall in economic activity lasting more than a few months.
The director of the Nabe association, Julia Coronado, stated that a bleak global outlook was exacerbating these fears, with the energy crisis in Europe, slower Chinese growth, and rising inflation unsettling global economies.
“You’re looking at a global economy that lacks a true growth engine,” she remarked. “That’s a significant shift, and I believe it will contribute to the pessimism, even though if you check beneath the hood of the United States, you’ll find a great deal of resilience.”
