US Economic Growth Was Strong in Q3. But What Comes Next?

By: Anneken Tappe · November 30, 2023 · Reading Time: 2 minutes

Beating Expectations

America’s economy has done something remarkable, and that’s at least partially thanks to consumers like you and me.

U.S. GDP, the broadest measure of economic activity, grew at an annualized, seasonally adjusted rate of 5.2% between July and September. That’s the best result since the last three months of 2021. Even though high prices across the board did their best to deter consumers, Americans kept whipping out their credit cards, thereby boosting the economy, and posing a riddle to economists: What – if anything – would make people stop spending?

What’s Next?

Despite the strong Q3 results, the outlook for Q4 is muted.

The economy is widely expected to grow at a much slower pace over the winter months. The Federal Reserve Bank of Atlanta’s GDPNow forecast puts Q4 growth at only 2.1% on a seasonally adjusted and annualized basis, for example.

With the Fed’s benchmark interest rates still at the highest level in more than 20 years, mortgage rates above 7%, retail sales falling for the first time in seven months in October, and inflation weighing on consumer sentiment, economic activity could look different in the months to come.

That said, the Fed is also expected to be done with interest rate hikes. Even though inflation isn’t all the way at the central bank’s 2% target, the Fed’s Beige Book — a report of the twelve Fed districts — showed slowing economic activity this week.

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