New Federal Data Indicates US Economy Defying Predictions With Strong Q3 Growth Despite Rising Interest Rates: 'An Exercise In Humility'

The U.S. economy surprisingly expanded by an annualized rate of 4.9% in Q3 2023, according to new federal data. This robust growth comes despite 18 months of rising interest rates from the Federal Reserve.

The growth rate is the strongest since 2021 and has been primarily driven by consumer spending, reported The Financial Times. This growth has occurred in the face of the Federal Reserve’s most aggressive campaign to tighten monetary policy in decades, with interest rates being raised 11 times since March last year to a 22-year high of 5.25% to 5.5%.

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“It has been an exercise in humility,” said Kathy Bostjancic, chief economist at Nationwide, commenting on the unexpected nature of the growth. The high consumer spending has largely been attributed to a healthy labor market and continuing demand for workers.

Despite the positive economic performance, economists are warning that the GDP may not continue to defy predictions. Some have noted signs that consumer strength is starting to wane, and businesses are becoming more cautious. Gregory Daco, chief economist at EY-Parthenon, predicts that the U.S. economic engine may begin to sputter in the coming months.

According to forecasts compiled by Bloomberg, economists expect U.S. GDP growth to fall to 0.8% next quarter, and further down to 0.2% in the first three months of 2024.

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