Today, the United States economy continued to soar with a strong showing in the third quarter of 2023. It grew by a stunning 4.3% at an inflation-adjusted annualized rate. That’s a pretty big jump from the second quarter’s 3.8% growth rate. Leading this charge was a record increase in consumer spending and a recovery in exports.
Consumer spending in real terms increased a whopping 3.5% in the third quarter. This is a notable acceleration compared with the 2.5% annualized increase in the prior quarter. This uptick suggests that wealthier Americans continued to drive economic activity despite various external pressures. Exports exploded by 8.8%, a significant rebound after suffering a 1.8% drop in the second quarter. This historic increase shows just how strong the world’s demand is for U.S. goods and services.
Even with those strong economic signals, futures on all three major U.S. stock indices signaled a downbeat day ahead. Futures on the S&P 500 creaked down by 0.06%, suggesting some early inklings of market nervousness. The futures on the index of tech heavy stocks, the Nasdaq 100 ticked down by 0.08%, while Dow futures were last down by 40 points. Investors are measuring robust economic data against a backdrop of future unknowns. This half-and-half performance in the futures market shows the care they’re taking.
This acceleration in consumer spending is especially noteworthy as it is a key pillar in lifting the full economy. Consumers are the largest component of economic activity. As a forward indicator of confidence, the increase is expected to spur strong business investment and hiring.
Exports are rebounding big time. This increase helps U.S. GDP directly, and improves the outlook for global economic conditions in ways that will help U.S. firms capitalize on them.