by Lucia Mutikani
WASHINGTON (Reuters) – The U.S. economy grew in the third quarter at its fastest pace in nearly two years as rising wages helped boost consumer spending, thwarting recession fears that have lingered since 2022.
In a first estimate, gross domestic product (GDP) grew at an annualized rate of 4.9% over the three months from July to September, the largest increase since the fourth quarter of 2021, said the Bureau of Economic Analysis of the Commerce Department.
Economists polled by Reuters expected on average a growth rate of 4.3%, after growth of 2.1% in the second quarter, still at an annualized rate.
Estimates ranged from 2.5% to 6.0%, a wide margin reflecting the fact that some initial data, including September durable goods orders, goods trade deficit, wholesale and retail inventory figures , were published at the same time as those of GDP.
The economy is growing at a pace well above what Fed officials consider a non-inflationary growth rate, about 1.8%.
Although the strong pace of growth recorded in the last quarter is unlikely to continue, it demonstrates the resilience of the economy despite aggressive interest rate hikes decided by the Federal Reserve to curb rising prices.
Growth could slow in the fourth quarter due to strikes by United Auto Workers and the resumption since October 1 of student loan payments by millions of Americans, which had been suspended during the pandemic. Covid-19.
Most economists have revised their forecasts and now believe the Fed can engineer a “soft landing” for the economy, pointing to strong worker productivity and moderating unit labor cost growth in the second quarter, which they say continued into the July-September period.
The GDP data is unlikely to impact monetary policy in the near term, given rising U.S. Treasury yields and falling stock markets, which have led to tighter financial conditions.
Financial markets expect the Fed to keep interest rates unchanged at its October 31-November 1 meeting, according to CME Group’s FedWatch.
Since March, the US central bank has raised its overnight interest rate by 525 basis points to the current range of 5.25% to 5.50%.
(Report by Lucia Mutikani, by Stéphanie Hamel)
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