{"id":2110991,"date":"2023-11-29T13:26:02","date_gmt":"2023-11-29T18:26:02","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-economy-grows-5-2-in-third-quarter-higher-interest-rates-sapping-momentum\/"},"modified":"2023-11-29T13:28:35","modified_gmt":"2023-11-29T18:28:35","slug":"us-economy-grows-5-2-in-third-quarter-higher-interest-rates-sapping-momentum","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/us-economy-grows-5-2-in-third-quarter-higher-interest-rates-sapping-momentum\/","title":{"rendered":"US economy surges 5.2% in Q3, but momentum hindered by rising interest rates"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">26<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fus-economy-grows-5-2-in-third-quarter-higher-interest-rates-sapping-momentum%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2110991&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p><!DOCTYPE html PUBLIC \"-\/\/W3C\/\/DTD HTML 4.0 Transitional\/\/EN\" \"http:\/\/www.w3.org\/TR\/REC-html40\/loose.dtd\"><br \/>\n<?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><html><body><\/p>\n<div class=\"entry-content\">\n<p><strong>November 29, 2023 \u2063\u2013 \u20635:38 PM UTC<\/strong><\/p>\n<p><strong>WASHINGTON (Reuters)\u2063 \u2013<\/strong> The U.S. economy grew faster\u2062 than initially thought \u200din the third\u2063 quarter \u2064as businesses built more warehouses and accumulated\u2063 machinery equipment, \u2063but momentum appears \u200dto have \u200csince waned as\u2064 higher \u2062borrowing costs curb hiring and spending.<\/p>\n<div id=\"div-gpt-ad-1663871513696-art-3\" style=\"min-width: 320px; min-height: 50px; text-align: center;\">  \t<script>  \t\tgoogletag.cmd.push(function() { googletag.display('div-gpt-ad-1663871513696-art-3'); });  \t<\/script>  <\/div>\n<div class=\"ad-slot__ad-label\">Advertisement<\/div>\n<\/p>\n<p>The growth pace, which was the\u200d quickest in nearly two \u2064years, \u200chowever, likely exaggerated the health of the \u2063economy last quarter. When measured from the income side, economic activity increased \u2062at a moderate pace.<\/p>\n<p>Nevertheless, the mixed report from the Commerce Department on Wednesday was another reminder that the economy continued to grow despite fears of a recession that \u200chave persisted since late 2022.<\/p>\n<p>\u201cNo sign of\u200d darkening\u2062 skies for the economy in today\u2019s report, but \u200dgrowth is \u2062cooling,\u201d said Christopher Rupkey, chief economist at \u2062FWDBONDS in New York. \u201cThere\u2019s simply not as much wind in the\u2063 economy\u2019s sails in the\u200d final quarter this year.\u201d<\/p>\n<p>Gross domestic product increased at a 5.2% annualized rate last quarter, revised up from the previously reported 4.9% pace, the \u2064Commerce Department\u2019s Bureau of Economic\u2064 Analysis (BEA) said in its second estimate of third-quarter GDP. It was the fastest pace\u200d of expansion since the fourth\u200d quarter of 2021.<\/p>\n<p>Economists polled \u200cby Reuters had expected GDP growth would be revised up to\u2063 a 5.0% rate. The economy grew at\u2064 a \u20622.1% pace \u2064in the April-June quarter and is \u200dexpanding at a pace well above what Federal Reserve\u2062 officials regard as the non-inflationary growth rate of around \u20641.8%.<\/p>\n<p>The upward revision to growth\u2062 last \u2062quarter\u200b reflected upgrades to \u200bbusiness investment\u2064 on structures, mostly warehouses \u200dand healthcare\u200c facilities. Spending by \u2063state and local governments was\u2064 also revised higher.<\/p>\n<p>Residential investment was\u200b also raised, thanks \u2063to the construction of more single-family homes,\u200d helping to end nine straight quarters of contraction.<\/p>\n<p>Private inventory investment was higher than \u2064previously estimated as wholesalers amassed more machinery equipment. Inventory investment added 1.40\u200b percentage points to \u2064GDP growth,\u200b instead of the 1.32 percentage points\u200d estimated last month.<\/p>\n<p>But growth in\u200d consumer spending, \u200bwhich accounts for more than two-thirds of U.S. economic activity, was lowered to a still-solid 3.6% rate. The downgrade from the previously estimated\u200b 4.0% growth pace was because of cuts to outlays on\u2062 financial services and insurance as well as \u2063used light trucks, likely the result of shortages caused by the recently ended United Auto Workers \u2064strike.<\/p>\n<p>Stocks on Wall Street were trading higher. The dollar edged up against \u200ca basket of currencies. \u2064U.S. Treasury prices rose.<\/p>\n<h2 class=\"wp-block-heading\">MIXED DETAILS<\/h2>\n<p>After-tax profits without inventory \u2064valuation and capital consumption adjustment, which corresponds to S&#038;P 500 profits, increased by $126.2 billion, or at a\u200c 4.3% rate. Profits rose at a 0.8% rate\u200c in the \u200dsecond quarter. The increase in profits occurred across domestic financial and non-financial corporations as well as from the rest of the world.<\/p>\n<p>Personal\u200c income was higher \u200cthan initially estimated, accounting for increases in wages. The saving\u200d rate was raised to 4.0% from \u20633.8%. Higher wages contributed to the economy growing at \u2064a 1.5% \u200crate \u200clast quarter, the fastest in a year, when measured from the\u200b income side.<\/p>\n<p>Gross domestic income (GDI) increased at a rate of 0.5% in the second quarter. But GDI contracted at a 0.2% \u2062pace on a year-on-year basis, \u2064the first decline\u200c in three years.<\/p>\n<p>\u201cThe only time the\u200c economy measured by incomes has declined at this pace and\u2062 was not in recession was in the third quarter of 2007. A recession\u2064 began in the next quarter,\u201d said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.<\/p>\n<p>In principle, GDP and\u200d GDI should be equal,\u200d but in practice differ as they are estimated using different and \u200blargely independent \u200dsource data. The gap between GDI and GDP has re-widened \u2063after narrowing when \u2063the BEA implemented\u2063 its annual\u2063 benchmark revisions in September.<\/p>\n<p>\u201cWhile the recent performance of the economy looks much less impressive on the GDI numbers, both series ultimately suggest that the economy\u200d has \u200cavoided recession this year,\u201d said\u2063 Michael Pearce, lead U.S. economist at Oxford\u200b Economics in \u200cNew York.<\/p>\n<p>The average of\u2063 GDP and GDI, also \u2063referred to as gross domestic \u2063output and considered\u2062 a better measure\u200b of \u2064economic activity,\u200d increased at \u2062a 3.3% rate in the July-September period, quickening from a 1.3% growth pace in the\u200b second quarter.<\/p>\n<p>That, however, \u200cis in the past as economic activity\u200b looks to have cooled significantly at the start of the fourth quarter, with\u2063 retail sales\u200d falling for the first time in seven months\u200c in\u2064 October. Job growth slowed last month \u200dand the unemployment rate rose to\u200c a nearly two-year high of\u200c 3.9%.<\/p>\n<p>Moderate growth prospects were reinforced by other data from the Census Bureau showing the goods trade deficit widening 3.4% to $89.8 billion in October as\u2062 exports declined. That suggested trade could be\u200d a drag on GDP growth this quarter after \u2062being a neutral factor in the April-June period. Wholesale \u2062inventories dropped, while stocks at retailers were unchanged.<\/p>\n<p>Slowing demand has raised optimism that the Fed is probably done <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/federal-reserve-delivers-bad-news-about-expectations-for-inflation-raising-interest-rates-report\/\" title=\"Federal Reserve Delivers Bad News About Expectations For Inflation, Raising Interest Rates: Report\">raising interest rates<\/a> this cycle, with financial markets even anticipating a rate\u2063 cut in mid-2024. Since\u2064 March 2022, the U.S. central bank\u2062 has raised its <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/unemployment-rate-rises-for-first-time-in-a-year\/\" title=\"Unemployment Rate Rises for First Time in a Year\">benchmark overnight interest rate<\/a> by 525 basis points to the current 5.25%-5.50% range.<\/p>\n<p>The GDP report also confirmed inflation was trending lower, with slight downward revisions to measures \u2062watched\u2064 by the Fed for monetary policy.<\/p>\n<p>\u201cThe\u200c Fed \u200ccould find\u2064 themselves\u200c in a sweet spot,\u201d said Jeffrey Roach, chief economist at LPL Financial \u200din Charlotte, \u200cNorth Carolina. \u201cInflation is trending lower, the consumer is \u2064still spending, but at a slower pace. The\u200c Fed could end its rate-hiking campaign without much pain inflicted on the economy.\u201d<\/p>\n<p><sub>Reporting by Lucia\u2063 Mutikani; Editing by Chizu \u200cNomiyama, Andrea Ricci and Paul\u200d Simao<\/sub><\/p>\n<\/p>\n<p>    \u200b  <\/p>\n<div id=\"rc-widget <br \/>\n<h2> How might weak global\u2063 demand, a strong\u200b dollar, and efforts by businesses to sell inventory \u2062affect the Fed&#8217;s projected rate hike schedule<\/h2>\n<p><span>  Is still growing,\u201d said DeQuadros.<\/p>\n<p>The report\u2063 also showed\u200c inflation pressures\u200d remained benign, with the personal consumption \u200bexpenditure (PCE) price index increasing at a 0.4% rate. Excluding the\u200b volatile food and energy components, the PCE price index was up 2.2%, underscoring the Fed&#8217;s view that recent \u200clow inflation readings were transitory.<\/p>\n<p>The central bank last month raised\u200b interest rates for the first time in nearly\u200b a\u2064 decade and signaled that further increases would be gradual. The Fed has a 2% inflation target. The\u200d dollar&#8217;s\u2063 value\u2062 against\u200b the \u2063currencies of\u200d the United \u2062States&#8217; main trading partners is\u2063 up 10.8% this year.<\/p>\n<p>The \u200cGDP report also showed corporate\u200c profits after tax falling $59.3 billion in the third quarter after increasing $66 billion in \u2064the second quarter. Profits of non-financial corporations dropped $27.4 billion after increasing $98.8 billion in the second quarter. With profits declining and outlays on \u2064equipment and nonresidential structures weakening, business spending on equipment is \u2063expected to contract in the fourth quarter.<\/p>\n<p>The GDP growth estimate for the fourth quarter is around a 2.0% rate. Growth \u200cestimates for \u200cthis period are likely to\u2063 be lowered after \u200cdata on Tuesday showed a \u200bwidening in the trade deficit in\u2063 October \u2063as exports hit a five-year low amid declining global demand.<\/p>\n<p>Weak global demand, a strong dollar and efforts by businesses to sell inventory rather than build stock could see the Fed delaying further \u200drate hikes next year. Economists expect a downturn in the energy\u200b sector \u2063in the\u2062 fourth quarter will also\u200c undercut growth.<\/p>\n<p>\u201cWe continue to believe the growth \u2062slowdown will force the Fed to back away from \u200cits projected rate hike schedule,\u201d said Millan Mulraine, \u2063deputy chief economist at TD Securities in New York.<\/p>\n<p>The economy grew at a 2.4% \u2062rate\u2062 in the first half of the year and economists expect growth to come in at about 2.4% for\u200d all of 2023, an improvement over the 2.2% average annual \u200bgrowth rate from 2010 through 2014.<\/p>\n<p>Output last quarter was revised to reflect less spending on services, which were previously reported to have increased at their quickest pace \u2062since\u200d the third\u2063 quarter of\u2064 2000.<\/p>\n<p>Inventories contributed 0.33 percentage point\u200d to GDP \u200dgrowth, compared to the previously reported 0.60\u200c percentage point. The drag on \u2062GDP growth\u2063 from trade\u2063 was, \u2064however,\u2064 smaller \u2063than initially reported, with the trade deficit subtracting 0.23 percentage point \u2064from \u200doutput. It was \u200dpreviously reported to have\u2063 subtracted 1.47\u2063 percentage points.<\/p>\n<p>\u00a0<\/p>\n<\/p><\/div>\n<p><small>Reporting by Lucia Mutikani; Editing by Andrea Ricci<\/small><\/p>\n<\/div>\n<p><\/body><\/html><\/p>\n","protected":false},"excerpt":{"rendered":"<p>November 29, 2023 \u2013 5:38 PM UTC WASHINGTON (Reuters) \u2013 The U.S. economy expanded faster than expected in Q3 due to increased warehouse construction and equipment accumulation. However, growth has slowed due to higher borrowing costs, resulting in reduced hiring and spending. The growth rate was the highest in the quarter<\/p>\n","protected":false},"author":1911,"featured_media":2110992,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","fifu_image_alt":"","footnotes":""},"categories":[542],"tags":[],"class_list":["post-2110991","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-oann"],"fifu_image_url":"https:\/\/cndimages.nyc3.digitaloceanspaces.com\/breaking-news\/wp-content\/uploads\/2021\/01\/IMG_2758-scaled-1.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2110991","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1911"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2110991"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2110991\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2110992"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2110991"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2110991"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2110991"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}