The News
The world’s largest economy grew 2.8% in the third quarter of 2024, initial US government estimates showed — a sturdy pace that, while slightly below economists’ expectations, indicates the country has avoided a post-pandemic recession.
US consumers spent more in the third quarter of 2024 than they have done since early 2023 — a robustness that belies the fact that many Americans report feeling under pressure from inflated prices.
“Overall, the U.S. economy appears to be doing just fine,” outperforming other developed markets, economist Paul Ashworth said in a Wednesday research note, CBS reported.
The report comes days before the US presidential election and next US Federal Reserve meeting, at which the central bank is expected to lower interest rates by another quarter point.
SIGNALS
GDP data is good news for the Fed, but not the whole story
Healthy growth numbers mean a sudden increase in layoffs is unlikely, which may in turn make the Fed more confident in continuing to lower interest rates.“Though GDP is backward-looking, it sends a clear message that the economy is doing well, and inflation is moderating, good news for the Federal Reserve,” an economist at Oxford Economics said, according to Barron’s. However, analysts expect the central bank to rely more heavily on inflation and employment data than GDP in making its next rate cut decision on Nov. 7, Barron’s wrote. On that front, Wednesday’s report included the personal consumption expenditures price index — a key economic gauge for the Fed — which showed lower inflation than the central bank’s target.
Harris could take some cautiously optimism from economic reports
The report represents the final GDP data to be released under the Biden-Harris Administration, and with the economy consistently ranking as a top issue among voters, Wednesday’s economic reading might help bolster the case for Kamala Harris as president. Since the Biden-Harris Administration took office, GDP has increased a cumulative 12.6%, and this month, consumer confidence is up 11% — the biggest monthly increase since March 2021. To that end, the Harris campaign has doubled down on economic messages in its paid advertising and stump speeches, although this “is often less visible in daily coverage” in the media, Semafor’s David Weigel noted. Still, Friday’s jobs report isn’t expected to be as strong, with employment likely seeing a hit from two hurricanes and the Boeing strike.
Euro zone growth pales in comparison to US numbers
In the third quarter, Europe’s economy also grew — but by a far smaller 0.4%, the European Union’s statistical agency said Wednesday. That still beat most analysts’ expectations of 0.2% growth, and “puts to rest any questions of whether the euro zone is currently in recession — it is not, and such worries were always overblown,” a Moody’s economist told CNBC. Part of the discrepancy in both regions’ post-pandemic economic trajectories may come down to the US employing “a mix of big spending and big government” during that era, The Atlantic wrote earlier this year: “American leaders responded to the pandemic by becoming more like Europe; now it’s Europe’s turn to become more like America.”