3rd Quarter Gdp Growth In Usa Is Revised

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3rd Quarter Gdp Growth In Usa Is Revised

3rd Quarter GDP Growth In USA Is Revised To 2.9% Due To Solid Consumer Spending

During the summer season, the pace of growth in the US economy was much better than initially thought. The reason behind it was solid consumer spending which covered the inventories rundown of the corporate sector.

The US GDP increased by 2.9% annually, while the market consensus was 2.6%. For the most part, the economists were of the view that only a reading of 2.7% was possible but what we got was 2.9%!

Based on the economic release, real consumer spending in the USA increased by 1.7%. This was the major factor that led to the revision, followed by private investment from the non-residential sector. In addition, the imports have also dropped, which supported the economy.

To account for the highest inflation for several decades, US retailers have also slowed down their orders. According to experts, this is also a factor that affects the GDP reading. During the summer season, the inflation was a little too strong than the reported values.

For starters, the CPCE was changed from 4.5% to 4.6%, which is a strong indicator to check the consumers spending patterns.

High Inflation Is Eating Away at American's Savings

We could talk about the factors raising inflation in the USA all day long... But the bottom line is that it forced the US citizens to start utilizing their savings which they had built during the pandemic. That's why the saving rate for the 3rd quarter was around 2.8%.

During the pandemic, the savings rates were standing at 17%, but after the opening of the economy and high inflation, consumers were forced to use their savings. In fact, the savings rate was around 9.1% just a year ago, but now, it has reached only 2.8%.

In a way, the current growth of the US GDP was not that much of an outlier since the USA is aggressively increasing its interest rates. This is slowing down the economy, but the Fed believes that it could also do some magic on inflation.

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