Surpassing Expectations (2.8%)... Higher Than Q2 (3%)
Personal Consumption Expenditure Up 3.7%... Highest Since Early Last Year
The United States achieved a growth rate exceeding 3% in the third quarter of this year. Supported by strong consumer spending and exports, the economy showed a more robust expansion than initially expected. This is likely to strengthen the position of the Federal Reserve (Fed), which has signaled a slowdown in the pace of monetary easing.
According to the U.S. Bureau of Economic Analysis (BEA) on the 19th (local time), the final figure for third-quarter real Gross Domestic Product (GDP) grew at an annualized rate of 3.1% compared to the previous quarter.
This surpassed the previously announced advance and preliminary estimates (both 2.8%) as well as the second-quarter growth rate (3.0%). The U.S. releases GDP growth rates in three stages: advance, preliminary, and final. The final third-quarter growth rate announced on this day significantly exceeded the U.S. potential growth rate, which is estimated to be in the high 1% range.
Consumption was the main driver of U.S. economic growth. Personal consumption expenditures in the third quarter increased by 3.7% quarter-on-quarter, marking the largest increase since early 2023. Exports rose by 9.6%, driven by strength in the services sector. These figures were revised upward by 0.2 percentage points and 2.1 percentage points, respectively, compared to the preliminary estimates. In addition, corporate investment and government spending were also revised upward.
The core Personal Consumption Expenditures (PCE) price index, which the Fed closely monitors, rose by 2.2%. Although this was lower than the 2.8% in the second quarter, it exceeded the preliminary estimate by 0.1 percentage points. The core PCE price index excludes food and energy, providing an indicator of the underlying inflation trend.
As the U.S. economy maintains strong growth, the Fed’s stance suggesting a slower pace of rate cuts next year has gained more weight. The day before, the Fed held its final Federal Open Market Committee (FOMC) meeting of the year and lowered its forecast for rate cuts next year from four times (a total of 1.0 percentage point) to two times (a total of 0.5 percentage point).
Oren Klakin, an economist at Nationwide, said, "The indicators released this week show that the economy will end 2024 in a solid state," but added, "While I still think the Fed is leaning toward monetary easing, the bar for rate cuts has been raised."
The labor market also remains robust. According to the U.S. Department of Labor on the same day, initial jobless claims for the week of December 8?14 fell by 22,000 from the previous week's revised figure to 220,000. This was also 9,000 below the expert forecast of 229,000. Continuing claims, which count those claiming unemployment benefits for at least two weeks, stood at 1,874,000 for the week of December 1?7, below both the previous week's revised figure of 1,879,000 and the market expectation of 1,890,000. Weekly jobless claims in the U.S. surged earlier this month but decreased last week; volatility tends to increase toward the year-end due to the concentration of holidays.
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