The United States economy boomed at a quarterly, annualized rate of 4.3% in the third quarter of 2023. That’s the fastest rate of growth in two years. This increase was above what analysts were expecting and is a sign of recovery after a few years of problems caused by unpredictable trade and immigration policies. Our economy was still reeling from self inflicted wounds as we cut $1 trillion out of government spending. Moreover, earlier federal government shutdowns disrupted ongoing data collection for important programs.
Consumer spending was a key driver of this lackluster expansion, increasing at a brisk annual rate of 3.5%. Most salient, this increase was driven largely by increased spending on healthcare services. The previous quarter’s real GDP growth rate was just 3.8%, a strong rebound in its own right amidst a dynamic and still uncertain economy.
Exports jumped by a stunning 7.4%, powered by an insatiable demand for American goods on foreign shores. Imports kept falling, a decline that has been largely blamed on tariffs placed on goods coming into the U.S. Former President Donald Trump first ordered these taxes in the spring. They have radically altered trade dynamics and the economic landscape as a whole.
Even with those pretty growth numbers, the U.S. job market is slowing down. This trend has alarmed a number of U.S. economists and policymakers. On top of that, inflation continues to be a major concern among consumers, contributing to increasing pinch as prices continue to soar.
The interaction among these factors serves to highlight the intricacy of the present economic landscape. That robust growth rate might provide a temporary sense of solace. We need to keep an eye on the downside risks to jobs and inflation.