The first look at third-quarter 2022 GDP indicates a moderate increase of 2.6% at an annual rate. Not a powerhouse number, but not a decline either. But expectations for the future are where things get really ugly. Sarah Chaney Cambon reports for The Wall Street Journal:
The U.S. economy grew in the third quarter but showed signs of a broad slowdown as consumer and business spending faltered under high inflation and rising interest rates.
Gross domestic product—a measure of goods and services produced across the nation—grew at a 2.6% annual rate in the third quarter after declining in the first half of the year, the Commerce Department said Thursday.
Trade contributed the most to the third quarter’s turnaround as the U.S. exported more oil and natural gas with the war in Ukraine disrupting supplies in Europe. Consumer spending, the economy’s main engine, grew but at a slower pace than in the prior quarter.
Businesses slashed spending on buildings, however, and residential investment fell at a 26.4% annual rate, the department said.
Stocks were mixed after the GDP release and earnings announcements. Treasury yields fell.
Economic uncertainty is growing and many economists are worried about the possibility of a recession in the coming 12 months. They expect the Federal Reserve’s efforts to combat high inflation by raising interest rates will further weigh on the economy.
“The overall state of the economy is deteriorating and a lot of it is just the weight of elevated inflation and higher interest rates,” said Richard F. Moody, chief economist at Regions Financial Corp. “I don’t think that we’ve seen the full effects of higher rates work their way through the economy, so that’s why we have pretty low expectations for the next several quarters.”
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