June 21, 2024

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Economist survey: GDP growth of 4.3% in 3Q, fastest in nearly 2 years

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The world’s largest economy probably expanded at the quickest pace in nearly two years during the third quarter on the back of a steadfast US consumer, a challenge for Federal Reserve officials who are debating whether additional policy tightening is needed.  

Gross domestic product advanced at a 4.3% annualized pace in July-September, according to the median projection in a Bloomberg survey of economists. Such growth illustrates that the US remains the global economic powerhouse as Europe stagnates and Asia contends with a struggling China.

Personal consumption, the primary engine of the US economy, is projected to advance at a 4% rate. Resilient demand is testing the policy skills of Fed officials after nearly two years of interest-rate hikes. While inflation is well off its peak, price pressures are still running almost twice as fast as their goal.

Thursday’s GDP report won’t be enough to nudge the Fed toward a November rate increase, but sustained spending momentum in the fourth quarter would likely raise the prospects for additional tightening around the turn of the year.

“Additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Fed Chair Jerome Powell said at the Economic Club of New York on Thursday.

September income and spending data on Friday will give a sense of the momentum in household demand and inflation ahead of the fourth quarter. 

Forecasters see a 3.7% increase in the core personal consumption expenditures price index, which is one of the Fed’s preferred measures because it excludes often-volatile food and energy costs. That would be the smallest annual gain since May 2021 and consistent with modest progress on inflation.

What Bloomberg Economics Says:

“Real 3Q GDP likely surged to a 4.7% annualized pace with consumers accelerating their…

Vince Golle, Craig Stirling, Bloomberg

2023-10-22 11:40:58

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