U.S. GDP Grew by 4.9% in Q3

The U.S GDP grew by 4.9% in the third quarter of the year, ahead of the expected 4.7% rate. Despite high interest rates, consumer spending was strong. Some have dubbed this the consumer “shopping spree” as the summer months were upon us. It adds up that consumers spend more in the summer due to the temperature shift, and due to the prime time for renovations.

In Q3, we saw the highest quarterly increase since Q4 2021. Slowing inflation contributed to this increase, as the job market is showing resilience. A recession is not expected for the U.S., shifting from previous predictions, however spending is expected to slow in the coming months for both businesses and consumers.

The personal saving rate declined to 3.8% in Q3, down from 5.2% previously. This tells us that consumers spent more, savings a little less during the summer. Layoffs are maintaining low levels, and consumers aren’t too hesitant on making purchases. Although consumers are spending, this includes borrowed money as interest rates maintain high rates. As sales have increased, so have credit card balances.

We have yet to see how high interest rates may cut some of this growth in the months to come, in addition to the resume of student loan payments. The good news for Americans is that economists are not expecting another interest rate hike from the Fed next week.