US economic growth falls short of expectations as consumer spending slows
Inflation will ‘undermine’ US economy, growth over time: Hoenig
Former Kansas City Federal Reserve President and CEO and former FDIC Vice Chairman Thomas Hoenig on supply problems and inflation and how the Fed is approaching these issues.
U.S. economic growth decelerated in the third quarter as consumer spending slowed amid a resurgence in new COVID-19 cases and as government assistance payments decreased.
Gross domestic product – the broadest measure of economic performance – grew at a 2% annual rate during the three months through September, the weakest of the recovery, according to an advance estimate released Thursday by the Commerce Department. Analysts surveyed by Refinitiv were expecting 2.7% growth. Second-quarter GDP was 6.7%.
"The Delta wave of infections, the waning fiscal stimulus and shortages, particularly of motor vehicles, triggered a marked slowdown in consumption growth," said Paul Ashworth, chief U.S. economist at research firm Capital Economics.
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Personal consumption grew at a 1.6% pace after accelerating 12% during the second quarter. Businesses have since the reopening of the global economy struggled to keep store shelves stocked due to supply-chain bottlenecks and labor deficiencies. The supply shortages have resulted in higher prices for the consumer.
Core personal consumption expenditures, the Federal Reserve’s preferred inflation measure, increased 4.5% in the third quarter. While that was below the 6.1% increase in the second quarter, it remained well above the Fed's 2% long-term target.