U.S. Economy Grows 2.8% Amid Consumer Spending Surge, Defying Recession Fears
The U.S. economy grew at a 2.8% annual pace last quarter, surprising forecasters with steady consumer spending despite elevated interest rates.
The U.S. economy demonstrated robust growth, registering a 2.8% annual rate in the last quarter. This surge occurred amid a backdrop of elevated interest rates, with consumers continuing to engage in spending.
GDP Performance
Forecasters had anticipated the country’s gross domestic product (GDP)—the overall value of goods and services produced in the U.S.—to reach 2.6% in the three-month period ending in September, based on a survey of economists by FactSet. Contrary to expectations, the world’s largest economy defied predictions, showcasing unexpected resilience in face of sharply higher borrowing rates resulting from the Federal Reserve’s monetary policy measures aimed at curbing inflation.
Steady Growth Amidst Challenges
Despite widespread forecasts of an impending recession, the U.S. economy continued its upward trajectory, bolstered by consistent hiring and consumer spending. Notably, consumer confidence surged in October, reaching its highest level since January 2024, according to the Conference Board. This newfound confidence could signal sustained spending by U.S. households, a vital component of economic growth.
Consumer Sentiment and Recession Perception
Analysts at PNC Financial Services Group, in a report, highlighted a significant decline in consumer perceptions of a potential recession. The percentage of consumers expecting a recession in the next 12 months fell to its lowest since July 2022, with just under two-thirds of respondents believing that a recession is either somewhat or very likely in the next 12 months.
This shift in consumer sentiment could indicate a strengthening economy, as increased confidence often translates to higher spending, further fueling economic growth. The resilience of the U.S. economy amidst challenges has underscored the persistence of consumer spending and overall economic activity, defying expectations of a downturn.
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