How to make sense of the positive GDP report

“The US economy shrank in the first half of the year, but in the third quarter, it started growing again — which some economists say is an optimistic sign that the country isn’t in a recession now. But underlying factors show the economy is clearly slowing down, they say.

The country’s GDP grew at a 2.6 percent annual rate in the third quarter, according to Commerce Department data released on Thursday. The growth was mainly driven by trade: American companies exported more goods and services, and imports dropped. Meanwhile, key components of the report — consumer spending and residential investment — reflected weaker economic conditions.

Although the two consecutive quarters of negative GDP earlier in the year met a common but unofficial definition of a recession, many economists said at the time that the labor market was still strong and the country wasn’t yet in an economic downturn. Economists and forecasters have warned about a potential recession in the next year, however, as the Federal Reserve continues to raise interest rates to bring inflation under control.”

“The labor market is still strong now. Employers have been adding hundreds of thousands of jobs to the economy each month and the unemployment rate stands at 3.5 percent, a half-century low. But economists say the data in the GDP report reflects an economy that is already cooling, and more pain is likely ahead.”

https://www.vox.com/policy-and-politics/2022/10/27/23426848/gdp-report-economy-third-quarter

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