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- US economy grew more than expected in 3rd quarter (abcnews.go.com)
U.S. Economy Outperforms Expectations with Robust Third-Quarter Growth
The U.S. economy demonstrated surprising strength in the third quarter, expanding at a rate exceeding economists’ predictions, according to federal government data released Tuesday. Despite lingering concerns about a sluggish job market and cautious consumer spending, the nation’s Gross Domestic Product (GDP) recorded an annualized growth rate of 4.3% in its initial estimate for the period. This marks an acceleration from the 3.8% growth observed in the previous quarter.
A significant driver of this economic surge was a boost in consumer spending, as reported by the U.S. Commerce Department. Consumer spending, which accounts for approximately two-thirds of all U.S. economic activity, is a crucial indicator of the nation’s overall economic health.
The strong GDP reading was also influenced by a rise in exports and a decrease in imports. This shift could potentially be linked to tariffs implemented earlier this year by President Donald Trump. The government’s GDP calculation subtracts imports to ensure that only domestically produced goods and services are included in the total.
The robust third-quarter growth appears to defy earlier anxieties surrounding a slow labor market, which some observers had viewed as a potential red flag for the broader economy. While the unemployment rate ticked up to 4.6% in November from 4.4% in September-its highest level since 2021-it remains low by historical standards. Hiring has notably slowed in recent months.
Meanwhile, inflation has continued to hover nearly a percentage point above the Federal Reserve’s target rate of 2%. These conflicting economic signals have placed the Federal Reserve in a challenging position, tasked with its dual mandate of controlling inflation and maximizing employment. The primary tool at the Fed’s disposal for addressing these pressures is interest rates.
Earlier this month, the Federal Reserve responded by cutting its benchmark interest rate by a quarter of a percentage point in an effort to stimulate hiring. This was the third rate cut this year, bringing the Fed’s benchmark rate to a range between 3.5% and 3.75%. While borrowing costs have significantly decreased from their 2023 peak, they still remain well above the 0% rate established at the onset of the COVID-19 pandemic.
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- US economy grew more than expected in 3rd quarter (abcnews.go.com)