American consumers don’t seem to be bothered that much by interest rates that are still high.
With a boost from those same consumers, the U.S. economy grew at a robust 2.8% annual rate for the third quarter of 2024. While reporting that piece of good news for the economy also said gross domestic product – the total output of goods and services – slowed a bit from its 3% second-quarter growth rate.
Consumer spending, which accounts for about 70% of U.S. economic activity, rose at a 3.7% annual pace last quarter. That’s up from 2.8% in the second quarter. Exports also contributed to the third quarter’s growth, increasing at an 8.9% rate.
The Associated Press reported that business investment growth slowed sharply on a drop in investment in housing and in nonresidential buildings such as offices and warehouses. Spending on equipment, on the other hand, surged.
Wednesday’s report also contained some encouraging news on inflation. The Federal Reserve’s favored inflation gauge —the personal consumption expenditures index, or PCE — rose at just a 1.5% annual pace last quarter, down from 2.5% in the second quarter and the lowest figure in more than four years, according to the AP report.
Despite widespread predictions that the economy would succumb to a recession, it has kept growing, with employers still hiring and consumers still spending. Those factors led to the Fed’s first interest rate cut in years.
The report “sends a clear message that the economy is doing well, and inflation is moderating — good news for the Federal Reserve,’’ Ryan Sweet, chief U.S. economist at Oxford Economics, told the AP.
