WASHINGTON — U.S. economic growth rebounded more than expected in the third quarter amid a continued decline in the trade deficit, but that overstates the health of the economy as aggressive interest rate hikes by the Federal Reserve have dampened growth. consumer spending.
Gross domestic product grew at an annualized rate of 2.6% last quarter, the Commerce Department said in its advance. GDP estimate on Thursday, ending two consecutive quarterly declines in output, which had raised concerns that the economy was in recession.
The economy contracted at a 0.6% pace in the second quarter.
Economists polled by Reuters had forecast GDP growth rebounded to a rate of 2.4%. Estimates ranged from as low as 0.8% to as high as 3.7%.
While the economy may not be in recession, the risks of a slowdown have increased as the Fed doubles rate hikes as it battles the fastest inflation in 40 years. The U.S. central bank raised its benchmark overnight interest rate from near zero in March to the current range of 3% to 3.25%, the fastest pace of policy tightening in a generation or more.
The report will have little impact on monetary policy, with Fed officials monitoring September personal consumption expenditure price data and third-quarter labor cost figures due Friday, ahead of their release. political meeting on 1 and 2 November.
The trade deficit narrowed sharply, partly because slowing demand reduced the import bill. Exports also rose for much of the last quarter. Sudden swings in trade and inventories were behind the contraction in GDP in the first half of the year.
Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, slowed to 1.4% from the 2% pace in the April-June quarter.
Consumer spending is supported by a strong labor market, which is pushing up wages. The Labor Department on Thursday reported a modest increase in the number of people filing new claims for unemployment benefits last week.
Initial jobless claims rose by 3,000 in a seasonal adjustmentweted 217,000 for the week ended October 22. Claims have remained very low despite reports of companies, mostly in interest rate-sensitive sectors of the economy, laying off workers.
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