US GDP grew 2.9% in the third quarter, above expectations

The growth of the GDP of the United States in the third quarter of 2022 slightly exceeded market expectations, standing at 2.9% in its annual projection, according to the second estimate published this Wednesday by the Department of Commerce.

The US economy rebounded more strongly than initially thought in the third quarter, the government confirmed, but higher interest rates as the Federal Reserve battles inflation have raised the risk of a recession next year.

The first data for the previous quarter, published at the end of October, reported growth of 2.6% in annual projection (the projected figure for 12 months if conditions were maintained at the time of measurement).

In the comparison with the second quarter, meanwhile, growth was 0.7% compared to 0.6% announced in the first estimate.

The upward revision was due to improvements in consumer and business spending growth, as well as fewer imports, which offset the drag of a slower pace of inventory buildup.

When measured from the income side, the economy grew at a rate of 0.3 percent. The Gross Domestic Income (IIB) had contracted at a rate of 0.8% in the second quarter. In principle, GDP and IIB should be the same, but in practice they diverge, since they are estimated using different and largely independent sources.

The average GDP and IIB, also referred to as Gross Domestic Production and considered a better measure of economic activity, increased at a rate of 1.6% in the July-September period after contracting at a rate of 0.7% in the second quarter .

Current production earnings declined at a rate of $31.6 billion in the third quarter after rising at a rate of $131.6 billion in the second quarter.

With the Federal Reserve embarking on what has become the fastest rate-raising cycle since the 1980s, the economy is in danger of slipping into recession as early as the first half of next year.

Economists, however, believe that any recession will be short and mild due to unprecedented strength in the labor market.

The housing market is unraveling, with residential investment contracting for six consecutive quarters, the longest since the housing market crash in 2006. In addition, consumer and business confidence is on the decline, which could affect spending and undermine job growth.