Consumer spending rises 3.7% in third quarter, marking the fastest pace since early 2023
The US economy expanded at a 3.1 percent annualized rate in the third quarter, a stronger pace than previously estimated, according to the Bureau of Economic Analysis.
BNN Bloomberg reported that this represented an upward revision from the earlier projection of 2.8 percent, driven by stronger consumer spending and exports.
Consumer spending increased by 3.7 percent during the July-to-September period, the fastest pace since early 2023. Exports also exceeded earlier estimates, with both categories seeing gains driven by services.
These figures reinforce the view that the economy continues to grow robustly, even as forecasters anticipate a slowdown.
The report included an adjustment to one of the Federal Reserve’s preferred inflation measures. The personal consumption expenditures (PCE) price index, excluding food and energy, was revised to 2.2 percent.
This comes ahead of the November PCE data release scheduled for Friday.
The Federal Reserve’s announcement on Wednesday, which indicated a slower pace of interest rate cuts in 2025, was partly based on stronger-than-expected economic data. This stance triggered a stock-market selloff.
Economist Oren Klachkin from Nationwide commented, “This week’s data show the economy is set to end 2024 on a solid note, which is fortunate since we’ll have to contend with heightened policy uncertainty and possibly greater challenges in 2025.”
He added, “We think the Fed maintains an easing bias, but the bar for rate cuts just got higher.”
In addition to consumer spending and exports, other GDP components, including business investment, residential investment, and government spending, were also revised higher.
These adjustments contributed to the upward revision of third-quarter GDP growth.
Separate data released on Thursday revealed a drop in applications for US unemployment benefits, following a spike earlier in December.
Seasonal volatility often affects unemployment claims during the holiday period. Despite the fluctuations, claims remained near pre-pandemic levels, indicating a relatively stable labour market.
Existing-home sales in the US exceeded a rate of 4 million in November, the highest level in six months. Buyers appeared to adjust to mortgage rates above 6 percent, even as affordability challenges persist.
As 2024 draws to a close, the US economy shows resilience, with strong consumer spending, stable employment levels, and signs of recovery in the housing market.
However, uncertainties surrounding Federal Reserve policies and broader economic challenges remain focal points for 2025.
