WASHINGTON, Oct 27 (NNN-AGENCIES) — The US economy grew faster than expected in the third quarter of the year, helped by a tight jobs market and consumer spending.
The economy expanded at an annual rate of 4.9% in the July to September period, according to the government’s first estimate.
It marked the biggest rise seen since the last three months of 2021.
Consumers spent a lot despite the Federal Reserve trying to clamp down on spending with higher interest rates.
Analysts expected that the economy would grow by 4.5% in the third quarter of this year.
But a strong jobs market meant that consumers were able to ask for bigger pay packets and keep spending on concerts, movies or holidays over the summer.
Consumer spending, which accounts for more than two-thirds of economic activity in the US, was the main driver behind the rise.
The latest figure is a big spike from the 2.1% growth seen in the three months to July.
In a statement, the US Bureau of Economic Analysis said the increase reflects “accelerations in consumer spending, private inventory investment, and federal government spending” among other factors.
The latest data comes ahead of a key meeting for the US Federal Reserve, where it will decide whether or not to raise interest rates again next week.
Raising interest rates is one of the key tools central banks use to try to tackle inflation. By making borrowing more expensive, the theory is consumers will spend less and lead to slower price rises.
So far, the world’s biggest economy has managed to defy the worst predictions.
In a separate update on Thursday, the US Labor Department said that the number of people applying for unemployment benefits remains low.
However, in the final quarter of the year, growth might be hampered by strikes by the United Auto Workers, as well as the fact that student loan repayments by millions of Americans will have resumed, putting more pressure on their budgets. — NNN-AGENCIES
