May 20, 2024

United States: Economic growth in the third quarter of 2024

The Department of Commerce report highlights that economic growth was primarily driven by two key factors: higher wages due to a tight labor market and increased consumer spending.

The tight labor market has led to an increase in wages, subsequently boosting consumer spending. Consumers have increased spending across various categories, from purchasing automobiles to dining out.

Furthermore, businesses have restocked at a brisk pace to meet strong demand, contributing to economic growth. The report emphasizes that companies have invested in equipment and supplies to keep up with consumer demand.

However, not everything has been positive in the U.S. economic landscape. Despite an increase in public spending, business investment has decreased for the first time in two years. This is attributed to a decline in expenditures on equipment such as computers and a decrease in factory construction.

Future Outlook

Despite robust economic growth in the third quarter of 2024, analysts suggest that this pace may be a peak before a gradual slowdown in the coming quarters.

In the fourth quarter, a decrease in the consumer savings rate is expected, combined with the resumption of student loan payments, which could impact spending. Additionally, interest rates are rising, posing a threat of increased delinquency on credit cards, especially for low-income consumers increasingly relying on debt to finance their purchases.

The housing sector also faces challenges as mortgage rates have reached their highest level in 23 years, and sales of used homes continue to decline. This weakening in the real estate sector is expected to affect the overall economy in the coming months.

Expert Comments

Lael Brainard, Director of the National Economic Council, has praised the results of the third quarter but warns about credit costs that could impact future expectations. Despite these challenges, Brainard highlights that the GDP has been solid, reaching an annual 4.9% in the third quarter.

Conclusions

The economic growth of the United States in the third quarter of 2024 has been remarkable, with a 5% increase compared to the previous year. This demonstrates the resilience of the economy and its ability to overcome concerns about a possible recession.

However, challenges must be considered, such as the rise in interest rates and weakness in the housing sector. These factors could affect economic growth in the coming quarters.

As we move into the future, closely monitoring these economic indicators and taking measures to mitigate potential negative impacts will be crucial. Sustainable economic growth is essential for the well-being of the nation and its citizens.