:max_bytes(150000):strip_icc()/GettyImages-2252069498-0dfab39126bc4cdfb963906db64bbb39.jpg "What To Expect From Tuesday’s Report On Economic Growth")
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Key Takeaways
- The U.S. economy is forecast to have grown at an annual rate of 3.2% in the third quarter after adjusting for inflation, a fast pace by historical standards.
- Healthy consumer spending continued to drive the economy’s growth, but a downturn in the labor market could dampen growth in the months ahead.
- The GDP data was originally expected in October but was delayed by the government shutdown.
Forecasters believe the economy grew at a fast pace in the third quarter, though the report was delayed by the government shutdown and the data is getting stale.
A long-delayed report on Gross Domestic Product is expected to show that the economy grew at an annualized rate of 3.2% in the third quarter, according to the median forecast of economists surveyed by Dow Jones Newswires and The Wall Street Journal. If proven true, it would be a slowdown from the 3.8% growth in the second quarter, but higher than the average of 2.6% since the third quarter of 2021.
The government shutdown in October and November delayed the widely watched economic indicator. An advance estimate of the third-quarter GDP growth was scheduled to be released in October, but was canceled because workers at the BEA and other statistical agencies were furloughed. The preliminary figures released on Tuesday will be revised once more as additional data becomes available.
What This Means For The Economy
Rapid economic growth generally means rising standards of living, although the data has been distorted lately by changes in trade brought on by tariffs.
The GDP hasn’t been as accurate a measure of economic growth lately as it usually is, because of President Donald Trump’s tariff campaign. Imports count against economic growth in GDP, and a surge of imports in the first quarter, as companies rushed to buy goods before the import taxes took effect, sent the GDP into negative territory. The on-paper slump was reversed in the second quarter, as imports declined.
Beneath all the turmoil, economists believe the economy continued to expand in the third quarter, powered by the main engine of economic growth: consumer spending.
“Available data suggest that the economy maintained robust momentum in the third quarter,” economists at Wells Fargo wrote. “Consumers came back with a vengeance in the second half of the year.”
That vengeance may prove to be fleeting. Jobs have become scarcer in the second half of the year, as the unemployment rate has risen to its highest level since the pandemic, leading some economists to speculate that a consumer spending slowdown is ahead, which would harm overall economic output.
“It’s hard to believe that kind of spending growth can be maintained given the rise in the unemployment rate,” Robert Fry, an independent forecaster, wrote in a commentary.
