(The Center Square) — The U.S. Bureau of Economic Analysis released its quarterly Gross Domestic Product data Thursday which the economy grew in the third quarter of 2022 by 2.6% at an annualized rate.
“The increase in real GDP reflected increases in exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending, that were partly offset by decreases in residential fixed investment and private inventory investment,” BEA said.
Experts said the GDP increase was fueled by a one-time trade deficit narrowing, which means these numbers could give false optimism for future quarters that won’t have the benefit of that same trade deficit boon.
“The mighty engine that used to be the American economy is now stalled, and the consequences are impacting Americans daily. Savings rates are near all-time lows as working families cope with more than $6,000 in lost purchasing power thanks to inflation,” said Joel Griffith, an economic expert at the Heritage Foundation. “Consumer debt is exploding as families turn to credit cards for groceries, gasoline, and even rent as the cost of living continues to rise faster than wages. Private domestic investment continued its plunge, with the worst back-to-back quarterly decline since 2009.”
Those figures come after two consecutive quarters of GDP decline, first shrinking by 1.6% in the first quarter of 2022 and then by 0.6% in the second quarter. That decline fit the standard definition for a recession and raised more economic fears, especially as inflation has soared and shown little sign of slowing down. The housing market has also slowed significantly, though unemployment levels remain stable.
BEA data showed Americans’ disposable income grew while personal savings dipped slightly.
“Disposable personal income increased $268.3 billion, or 6.0 percent, in the third quarter, compared with an increase of $253.3 billion, or 5.7 percent, in the second quarter. Real disposable personal income increased 1.7 percent, in contrast to a decrease of 1.5 percent,” BEA said. “Personal saving was $626.1 billion in the third quarter, compared with $629.0 billion in the second quarter. The personal saving rate — personal saving as a percentage of disposable personal income — was 3.3 percent in the third quarter, compared with 3.4 percent in the second quarter.”
The GDP growth surpassed the Dow Jones 2.3% prediction and sent stocks up Thursday morning.
“Within residential fixed investment, the leading contributors to the decrease were new single-family construction and brokers’ commissions,” BEA said. “The decrease in private inventory investment primarily reflected a decrease in retail trade (led by ‘other’ retailers). Within imports, a decrease in imports of goods (notably consumer goods) was partly offset by an increase in imports of services (mainly travel).”