© Reuters. FILE PHOTO: A person arranges produce at Greatest World Grocery store within the Mount Nice neighborhood of Washington, D.C., U.S., August 19, 2022. REUTERS/Sarah Silbiger/File Picture
WASHINGTON (Reuters) – The U.S. economic system rebounded extra strongly than initially thought within the third quarter, the federal government confirmed on Wednesday, however increased rates of interest because the Federal Reserve battles inflation have raised the dangers of a recession subsequent yr.
Gross home product elevated at a 2.9% annualized charge, the federal government mentioned in its second estimate of third-quarter GDP. That was revised up from the two.6% tempo reported final month. The economic system had contracted at a 0.6% charge within the second quarter.
Economists polled by Reuters had forecast GDP development could be raised to a 2.7% charge.
The upward revision mirrored upgrades to development in client and enterprise spending in addition to fewer imports, which offset the drag from a slower tempo of stock accumulation.
When measured from the revenue aspect, the economic system grew at a 0.3% charge. Gross home revenue (GDI) had contracted at a 0.8% tempo within the second quarter. In precept, GDP and GDI needs to be equal, however in apply diverge as they’re estimated utilizing completely different and largely unbiased supply information.
The typical of GDP and GDI, additionally known as gross home output and regarded a greater measure of financial exercise, elevated at a 1.6% charge within the July-September interval after shrinking at a 0.7% tempo within the second quarter.
Earnings from present manufacturing decreased at a $31.6 billion charge within the third quarter after rising at a $131.6 billion tempo within the second quarter.
With the Fed within the midst of what has turn out to be the quickest rate-hiking cycle for the reason that Nineteen Eighties, the economic system is at risk of sliding into recession as early as within the first half of subsequent yr. Economists, nevertheless, consider any downturn might be quick and gentle due to unprecedented labor market energy.
The housing market is crumbling, with residential funding contracting for six straight quarters, the longest such stretch for the reason that housing market collapse in 2006.
Shopper and enterprise confidence are in decline, which might harm spending and undercut job development.