In the third quarter of 2023, the United States economy overall boomed at an annual rate of 4.3%. It’s the fastest growth the economy has enjoyed in two years. That figure marks a significant growth from the 3.8% growth rate of the last quarter. Today’s jobs report, which was held up by a government shutdown, points to strong consumer spending. It further points to increased exports and increased capital investments as leading this economic growth.
Consumer spending exploded in a way we haven’t seen in years in the third quarter. It rose at an annualized rate of 3.5%, surpassing the 2.5% rise recorded last quarter. Consumer demand has skyrocketed, a large factor being an influx of health care services. This dramatic reversal of fortunes is indicative of broader, longer-term landscape changing priorities among American consumers. As households spent more on healthcare, consumer confidence seemed to be gaining a little steam.
Exports were a major contributor to the economy’s growth, skyrocketing by 7.4% in the third quarter. This increase is good news, indicating that international demand for American goods continues to be strong. It increases domestic manufacturing, and for every $1 billion invested creates an additional 8,000 jobs. Imports were down again. This decline was a result of President Donald Trump’s tariffs on imports coming into the United States that raised the cost of foreign goods.
This expansion of the U.S. economy did not come without strings attached. For sectors already facing insecurity due to trade and/or immigration policy changes, early signals may mean new waves of departures and layoffs. Additionally, austerity cuts to federal government spending have further undercut economic momentum. All these combined factors should further reinforce the notion that while consumers are spending, the rest of the economy is feeling much greater stress.
Through all these challenges, the economy performed better than analysts predicted. Though the job market has begun to slow, robust consumer spending has kept the economy humming. This contrast underscores the strength of the American consumer that continues to drive expenditure – even in the face of emerging economic storm clouds.