WASHINGTON, Dec. 22 (BNA) The US economy grew at a rate of 2.3% in the third quarter, slightly better than previously thought, the Commerce Department said on Wednesday.
The prospects for a strong recovery in the future are clouded by the rapid spread of the latest type of coronavirus, an Associated Press report said today.
The third and final look at the performance of GDP, the country’s total output of goods and services, was above last month’s estimate of 2.1% growth.
The newfound strength came primarily from stronger consumer spending than previously thought, as well as companies rebuilding their inventories more than initial estimates revealed.
The third-quarter gain of 2.3% came on the heels of explosive growth that began the year as the country emerged from the pandemic, at least economically.
Growth jumped to 6.3% in the first quarter and 6.7% in the second. The emergence of the delta variant in the summer caused much of the slowdown in the third quarter.
Now with the emergence of the omicron variable, which comes on top of high inflation and lingering supply chain issues, there are concerns that growth could be constrained as 2022 approaches.
Those concerns have sent the stock market on a turbulent ride in recent days, although fresh optimism that Omicron’s risks can be managed sent the Dow Jones Industrial Average up 560 points on Tuesday.
All the major US markets have rebounded this week, but all of them are in negative territory for the past 30 days.
Economists say it is too early to state explicitly the threats posed by the new format.
Oxford Economics cut its economic growth forecast for the current quarter from 7.8% to 7.3%, which would still represent a significant recovery from the third-quarter slowdown.
It is not only the re-emergence of the emerging Corona virus, which may hinder the economy next year. Inflation has risen to its highest level in nearly four decades, prompting the Federal Reserve to begin withdrawing the massive amounts of support it was providing the economy with as it shifted from trying to boost job growth to fighting inflation.
Economists expect GDP growth this year to be around 5.5%, the best showing since 1984 and a reversal from last year when the economy shrank 3.4% and the global pandemic wiped out 22 million jobs early in the year.
A report on Wednesday showed that consumer spending, which accounts for two-thirds of economic activity in the United States, grew at a rate of 2% in the third quarter, down from a 12% increase in the April-June quarter, but up from last month’s estimate. Quarterly gain of 1.7%.
However, the uncertainty of what is to come is now a matter for economists.
“The omicron variable presents a near-term downside risk as does supply chain disruptions and shortages that could be a constraint on households and businesses over the coming months,” said Rubella Farooqi, chief US economist at High Frequency Economics.
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