Breaking News: Consumer Spending Rises 3.5% in Q3, Matching Market Expectations
Weekly New Unemployment Claims at 7-Month Low
The United States maintained a solid growth rate in the high 2% range in the third quarter of this year. This was driven by a broad increase in consumer spending due to easing inflation.
According to the U.S. Bureau of Economic Analysis (BEA) on the 27th (local time), the preliminary estimate of real Gross Domestic Product (GDP) for the third quarter grew at an annualized rate of 2.8% compared to the previous quarter.
Although this was slightly below the second quarter growth rate (3.0%), it matched the previously released flash estimate and market expectations (both 2.8%). The U.S. releases GDP growth rates three times: flash estimate, preliminary estimate, and final estimate.
With this, the U.S. GDP growth rate has exceeded 2% in 8 out of the last 9 quarters. This is significantly above the U.S. potential growth rate, estimated to be in the high 1% range.
The main driver of growth in the U.S. economy was robust consumer spending. Consumer spending in the third quarter increased by 3.5% compared to the previous quarter, marking the highest level this year. Gross domestic income rose by 2.2%, and nonresidential investment increased by 3.8%.
The Personal Consumption Expenditures (PCE) price index, an inflation indicator closely monitored by the U.S. Federal Reserve (Fed), rose by 1.5%, in line with expectations. The core PCE price index, which excludes food and energy to show the underlying inflation trend, increased by 2.1%, falling short of the market forecast of 2.2%.
Bloomberg News evaluated that the U.S. third-quarter GDP growth rate demonstrates the potential for expansion of the U.S. economy despite inflationary pressures, rising borrowing costs, and political uncertainties.
The labor market continues to remain stable. According to the U.S. Department of Labor, new claims for unemployment benefits for the week of November 10?16 decreased by 2,000 from the revised previous week to 213,000. This is the lowest level in seven months since April, and also 2,000 below experts’ expectations of 215,000.
Continuing claims for unemployment benefits, which count those claiming benefits for at least two weeks, stood at 1,907,000 for the week of November 3?9, an increase of 9,000 from the revised previous week’s 1,898,000. However, this was 12,000 below the market forecast of 1,910,000.
The market is awaiting the release of October’s PCE inflation data, scheduled for this morning. Last month’s PCE inflation is expected to have risen 2.3% year-over-year, slightly higher than the 2.1% increase in September.
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