US Economic Growth Slows in Q3

Investing.com reports that the US economy experienced slower growth than anticipated in the third quarter, showing a 2.8% increase from July to September, according to preliminary data from the Commerce Department.

Key Details

• Expected vs Actual Growth: Economists had forecasted a stronger growth rate of 3.0%, similar to Q2's performance.
• Contributing Factors: The decline primarily stemmed from a reduction in private inventory investment and significant drops in residential fixed investments. However, these decreases were partially balanced by increases in exports and consumer spending.

Inflation Indicators

In addition to GDP figures, the core personal consumption expenditures (PCE) price index—a key inflation metric monitored by the Federal Reserve—registered a rise of 2.2% for Q3, down from 2.8% previously but surpassing expectations of 2.1%. Meanwhile, the headline PCE cooled to 1.8%.

Expert Commentary

Kathy Jones, Chief Fixed Income Strategist at Charles Schwab, referred to the PCE results as "soft landing numbers," suggesting that elevated interest rates might reduce inflation without jeopardizing the overall economy or labor market.

Public Sentiment

Despite these positive indicators, a recent poll indicated that many registered voters view the economy negatively, with rising food and housing costs intensifying their worries. Voter opinions are divided on whether Republican Donald Trump or Democrat Kamala Harris would better handle economic issues ahead of the upcoming election.

Labor Market Insights

Additionally, private payroll data for October revealed an unexpected leap to 233,000, indicating labor market resilience against challenges like natural disasters and strikes. The upcoming nonfarm payrolls report will provide further insights.

Federal Reserve Outlook

The Federal Reserve is likely to scrutinize these economic signals to determine potential rate cuts in their November meeting, following a notable 50 basis point cut in September aimed at supporting the labor market.