The third quarter saw the U.S. economy grow for the first time in 2022, allaying concerns about inflation at least temporarily, according to data released on Thursday by the Bureau of Economic Analysis.
GDP, the total value of all goods and services produced between July and September, rose at an annualized rate of 2.6%, exceeding the Dow Jones forecast of 2.3%.
Though the National Bureau of Economic Research is typically regarded as the judge of downturns and expansions, the reading in question comes after consecutive negative quarters to start the year, fulfilling a generally accepted definition of recession.
The shrinking trade deficit, which economists predicted and believe to be an isolated event that won’t be repeated in subsequent quarters, was a major contributor to the rise. Consumer spending, nonresidential fixed investment, and government spending all saw rises in GDP.
Gains were countered by falls in private inventories and residential fixed investment, according to the BEA.
The report is released as officials engage in a fierce struggle to control inflation, which is currently at its highest point in more than 40 years. Numerous reasons have contributed to price increases, including the epidemic and an extraordinary fiscal and monetary stimulus that is currently permeating the financial system.
The BEA report’s underlying picture was one of a declining economy, notably in terms of consumer spending and private investment.
Personal consumption expenditures, a measure of consumer spending, rose at 1.4% in the third quarter, a decrease from the 2% growth seen in the second quarter. After declining 14.1% in the second quarter, gross private domestic investment decreased by 8.5% this quarter, maintaining a pattern. Positively, exports increased by 14.4% while imports decreased by 6.9%.
The inflation front saw some encouraging developments.
The chain-weighted pricing index, a cost-of-living indicator that takes consumer behavior into account, increased 4.1% for the quarter, significantly less than the 5.3% gain predicted by the Dow Jones. In addition, the personal consumption expenditures price index, which the Federal Reserve uses as a major indicator of inflation, rose 4.2% less than the 7.3% it rose in the previous quarter.