Unexpected, spectacular, phenomenal… Thursday, October 26, economists were not short of superlatives when commenting on the first estimate of American gross domestic product (GDP) in the third quarter, published that day by the Department of Commerce. In fact, it increased by 4.9% at an annualized rate, much more than between April and June (+ 2.1%), and even at a rate higher than the 4.7% expected by the consensus of forecasters. Compared to the previous quarter, the increase is 1.2%.
“It’s dazzling, this is the strongest progression recorded since 2021”summarizes James Knightley, specialist in international economics at ING bank. “It’s a testament to the resilience of American consumers and workers, buoyed by Bidenomics.”immediately welcomed President Joe Biden in a press release.
At first glance, everything appears as if the increase in interest rates carried out by the Federal Reserve (Fed, central bank) had little effect on activity. Result: the recession that has been feared for months seems far from looming on the horizon, to the great surprise of many observers. “I never thought we would need a recession to bring down inflation,” also boasted the Democratic tenant of the White House, candidate for re-election in the presidential election in November 2024.
In detail, this good figure is largely due to American consumption, the main driver of the economy: it jumped by 4% between July and September, after + 0.8% in the second quarter. Spending on durable goods alone – namely those that last more than three years, such as household appliances or automobiles – increased by 7.6%.. “This could suggest that households are coping with the shock of the increase in credit costs initiated by the Fed,” notes Paul Ashworth, North America specialist at Capital Economics. Especially since the job market is holding up surprisingly well – the unemployment rate was only 3.8% of the active population in September, a month during which the country created 336,000 jobs, twice as much as expected.
Inflation nevertheless continues to erode purchasing power, and once the savings set aside during the pandemic were spent, Americans began to dip into their nest egg. Their savings rate, which peaked at more than 30% in 2020, fell to just 3.8% in September, according to Fed data. In May, it was still 5.3%. “Suffice it to say that consumption cannot remain at such levels for long”Judge Paul Ashworth.
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