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US gross domestic product grew at an annualized rate of 2.6% in the third quarter of 2022.
That beats the 2.4% growth estimate.
The advance estimate suggests the US economy is growing again after shrinking in the first two quarters of 2022.
Americans fearing a looming recession can breathe a little easier.
The economy’s gross domestic product grew at an annualized rate of 2.6% in the third quarter of 2022, according to a Thursday report from the Bureau of Economic Analysis. That advance estimate is above the median estimate from economists surveyed by Bloomberg of 2.4%.
That comes after the US economy shrank by 0.6% and 1.6% in the second quarter and first quarter of the year respectively.
“The third quarter data is likely to look something like a normal healthy economy,” Dean Baker, senior economist at the Center for Economic and Policy Research, wrote ahead of the advance estimate for the third quarter. “We should be past the big swings in net exports and inventories that drove the economy in prior quarters. We also should see a modest positive growth rate after two quarters of negative growth.”
Prior to Thursday’s news release, David Kelly, chief global strategist at JPMorgan Asset Management, also noted the estimate could be robust. Kelly said in a note that “this week’s GDP report could show surprising strength, especially following two negative quarters and numerous predictions of imminent recession.”
However, Kelly also wrote that the strong third quarter doesn’t mean the US economy is out of the woods yet.
“Going forward, growth could well turn negative in the fourth quarter and will likely be very weak over the next year until housing starts bottom and the trade and budget deficits hit a trough as a share of GDP, likely sometime in the middle of 2023,” Kelly stated. “Thereafter, slightly stronger economic growth could emerge.”
Today’s report is some good news for Americans worried about layoffs and other effects from a US recession as the return to positive GDP growth suggests that a downturn isn’t here yet. Inflation is still high though, with the core Consumer Price Index at a 40-year high. Consumer confidence also declined in October per the Conference Board.
“In principle, this is the sort of GDP report we should be happy to see at this point in a recovery,” Baker said ahead of the release. “However, with the Fed continuing to hike rates, and most of the impact of past rate hikes yet to be felt, this could be the last good report we see for a while.”
This is a developing story. Please check back for updates.