US third-quarter economic growth seen fastest in nearly 2 years
© Reuters. FILE PHOTO: Prices of fruit and vegetables are on display in a store in Brooklyn, New York City, U.S., March 29, 2022. REUTERS/Andrew Kelly/File Photo
While the anticipated robust growth pace notched last quarter is probably not sustainable, it would demonstrate the economy's resilience despite aggressive interest rate hikes from the Federal Reserve. Still, growth could slow in the fourth quarter because of the United Auto Workers strikes and the resumption student loan repayments by millions of Americans.
According to a Reuters survey of economists, GDP likely increased at a 4.3% annualized rate last quarter, which would be the fastest since the fourth quarter of 2021. The economy grew at a 2.1% pace in the April-June quarter and is expanding at a pace well above what Fed officials regard as the non-inflationary growth rate of around 1.8%.
A strong labor market has supported consumer spending. Though wage growth has slowed, it is rising a bit faster than inflation, lifting households' purchasing power. Growth in consumer spending is expected to have exceed a 4.0% rate after only rising at a 0.8% pace in the second quarter.Student loan repayments resumed in October, which economists estimated was equal to roughly $70 billion, or around 0.3% of disposable personal income, and could dent spending.
"We see scary headlines about credit card debt rising too fast, but it had fallen quite a bit during the pandemic," said Luke Tilley, chief economist at Wilmington Trust in Philadelphia."When you look at it as a share of people's monthly flow of income, it's actually fairly normal. I don't think that we've hit a point where it's a canary in the coal mine."
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