The US economy slowed to a modest annual rate of 2.1 percent in the July-September quarter, according to the US Department of Commerce’s second read of the data, slightly better than its first estimate.
However, economists are predicting a solid rebound this quarter as long as rising inflation and a recent uptick in COVID-19 cases do not derail activity.
The increase in GDP is up from an initial estimate of 2 percent for the third quarter, the department reported on Wednesday.
Photo: Reuters
However, the revision was still well below the solid gains of 6.3 percent in the first quarter and 6.7 percent in the second.
The small increase from the initial GDP estimate a month ago reflected a slightly better performance for consumer spending, which grew at a still lackluster 1.7 percent rate in the third quarter, compared with a 12 percent surge in the April-June quarter.
The contribution to GDP from business inventory restocking was also revised up.
The economy’s weak summer performance reflected a big slowdown in consumer spending as a spike in COVID-19 cases from the Delta variant caused consumers to grow more cautious and snarled supply chains made items such as new cars hard to get and also contributed to a burst of inflation to levels not seen in three decades.
While COVID-19 cases in the past few weeks have started to rise again in many parts of the country, economists do not think the latest increase will be enough to dampen consumer spending, which accounts for 70 percent of economic activity.
The expectation is that the economy in the October-December quarter could grow at the strongest pace this year, with some economists forecasting GDP could surge to 8 percent rate in the fourth quarter.
For the whole year, the expectation is that the economy would grow by about 5.5 percent, which would be the best showing since 1984 and a big improvement from last year, when the economy shrank 3.4 percent.
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