- Real GDP rose 4.9% at an annualized rate in the third quarter.
- That greatly surpasses the roughly 2% seen in both the first and second quarter of this year.
The US economy saw much higher GDP growth in the third quarter than the first two quarters of the year.
Real gross domestic product, or real GDP, rose at an annualized rate of 4.9%, according to the advance estimate for the third quarter from the Bureau of Economic Analysis. This increase is above the forecast of 4.3%.
The advance estimate suggests much stronger growth than the roughly 2% rates seen in the first and second quarters of the year.
Real personal consumption expenditures rose 4.0%, quicker than the 0.8% in the second quarter, based on seasonally adjusted data at annual rates. Meanwhile, real fixed investments slowed from 5.2% in the second quarter to 0.8% in the third quarter.
"The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment," a news release about the new data said. "Imports, which are a subtraction in the calculation of GDP, increased."
The Biden Administration celebrated the robust economic growth. Joelle Gamble, deputy director of the White House National Economic Council, told Insider recent GDP reports have shown robust growth — with consumer spending and manufacturing investments as two areas supporting this — while inflation is cooling.
Gamble also said that both the US economy and workers are resilient.
"I think the bottom line here is that we're seeing an economy that is growing strong, that is growing from the middle out and the bottom up, not the top down," Gamble said.
But despite the growth, Gregory Daco, EY chief economist, said in commentary that while the "signs of economic strength will fuel speculations that the economy is reaccelerating, we do not expect such strong momentum will be sustained."
"Cost fatigue, rising debt servicing costs and slowing job growth are about to be felt more widely by consumers and businesses," Daco said. "In that regard, the broad-based pullback in business equipment investment is a cautionary tale."
While the advance estimate and the results for the first two quarters show strong GDP growth, some experts believe a recession is coming — even if they expect it will not be severe.
For example, The Conference Board is predicting a mild downturn next year.
"While the prospects for a 'soft landing' have risen, The Conference Board believes it is more probable that the US economy will slip into a short and shallow recession in early 2024," a brief said.
The brief noted that "as the economy cools in early 2024 so too will the labor market." The US labor market added 336,000 jobs in September after a revised gain of 227,000 in August.
Larry Adam of Raymond James also said in a recent note that "growth will be much slower over the next nine months and lead to a mild recession." One reason for this is the increasing headwinds that consumers are facing.
Although there may be some concerns of a mild recession, a recent post about the results of Bankrate's quarterly survey of economists noted that the chance of a recession based on the average forecast among respondents has declined from 65% from the third quarter of 2022 to 46% from the third quarter this year.