U.S economy grew at 4.9% in third quarter; fastest growth rate in nearly two years

US Economy 2023: The U.S economy grew at a more than expected speed in the third quarter aided by a resilient job market that helped boost consumer spending. This in turn is holding off the prospect of a recession.

US GDP growth

The strong consumer spending was the main driver of a 4.9% annualised increase in gross domestic product, according to the U.S government data. That was a jump from a 2.1 per cent rate in the second quarter, and the strongest figure since the fourth quarter of 2021.

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This comes at a time, when the U.S Fed is preparing for a meeting next week to decide the interest rates.The central bank has been trying to use higher rates to bring inflation back towards its 2% target without causing a sharp deterioration in the economy.

As per AFP, analysts have raised fears of a downturn as the US central bank started lifting interest rates rapidly last year to fight inflation, but the world's biggest economy has so far defied these predictions.

Consumer Spending in US

The consumer spending in the United States rose at an annualised rate of 4%, up from just 0.8% in the second quarter. The solid growth was seen both in goods and services sector.

AFP quoted some Analysts and mentioned that the growth is expected to slow in the final three months of this year.

"As excess savings built up during the pandemic continue to drop and wage gains decelerate, it is difficult to see how this pace of consumer spending growth can be maintained," economist Mike Fratantoni at the Mortgage Bankers Association told AFP.

He further mentioned that the rising delinquency level in credit cards and auto loans are expected to hold back consumer spending.