US GDP grows at solid 2.8% pace in Q3, helped by consumer spending
Sign up now: Get ST's newsletters delivered to your inbox
The US economy’s primary growth engine – consumer spending – advanced 3.5%, the most in 2024.
PHOTO: AFP
Follow topic:
The US economy expanded at a solid pace in the third quarter, largely powered by a broad-based advance in consumer spending as inflation continued to cool.
Gross domestic product (GDP) increased at a 2.8 per cent annualised pace in the third quarter, the second estimate of the figures from the Bureau of Economic Analysis showed on Nov 27. The economy’s primary growth engine – consumer spending – advanced 3.5 per cent, the most in 2024.
The GDP report showcases the durability of an economic expansion that has been tested by lingering price pressures, high borrowing costs and political uncertainty. While progress on inflation has levelled out more recently, the Federal Reserve has started reducing interest rates.
With Donald Trump sealing his return to the White House, American businesses and consumers now await the roll-out in 2025 of his economic agenda.
The government’s other main gauge of economic activity – gross domestic income (GDI) – rose 2.2 per cent, after a revised 2 per cent annualised pace in the second quarter. While GDP measures spending on goods and services, GDI measures income generated and costs incurred from producing those same goods and services. The average of the two growth measures in the third quarter was 2.5 per cent.
The GDI data include figures on corporate profits. After-tax profits were little changed. Profits as a share of gross value added for non-financial corporations, a measure of aggregate profit margins, edged up to 15.6 per cent last quarter from 15.5 per cent in the prior three-month period.
Trump’s win has added fuel to a recent rally in stock prices, in part because many traders believe his economic agenda will keep boosting corporate profits. The President-elect has vowed to slash corporate taxes as well as hit Chinese shipments with punitive tariffs, on top of tasking Wall Street executives with leading the departments of Treasury and Commerce.
On the flip side, some economists are concerned that Mr Trump’s fiscal plans will put upwards pressure on inflation.
The GDP report showed the Fed’s preferred metric – the personal consumption expenditures (PCE) price index – rose at an unrevised 1.5 per cent annualised rate in the third quarter. Excluding food and energy, the core PCE gauge climbed 2.1 per cent, versus 2.2 per cent in the previous estimate. BLOOMBERG
