U.S. economic growth rebounded during the third quarter after six months of steady declines, according to data released Thursday by the Commerce Department.
U.S. gross domestic product (GDP) grew at an annualized rate of 2.6 percent between July and September, up from declines of 1.6 percent in the second quarter and 0.6 percent in the third quarter of 2022, the Bureau of Economic Analysis reported Thursday. That means that if the third quarter’s pace of growth lasted 12 months, the U.S. economy would have grown 2.6 percent by the end of that time.
Economists expected U.S. GDP to rise at an annualized rate of 2.3 percent in the third quarter, according to consensus estimates. Yet even though the growth numbers suggest an economy growing relatively strong, there were warnings signs within the report about a slowdown.
“Real GDP increased in the third quarter, but I don’t expect this growth to continue later this year or early next,” wrote John Leer, chief economist at Morning Consult, in a Thursday analysis.
“Much of the growth in Q3 GDP was driven by an increase in exports, reflecting the global reopening that occurred this past summer, but weak global demand combined with a relatively strong U.S. dollar are likely to significantly limit export growth.”
The third-quarter GDP increase was driven almost entirely by a surge in exports, which add to GDP calculations, and a steep decline in imports, which detract from GDP. The trade dynamic shifted rapidly from the first and second quarters, when surging imports and declining exports turned GDP growth negative despite strong activity elsewhere in the economy.
Consumer spending also held firm during the third quarter, rising 1.4 percent after an increase of 2 percent during the second quarter.
The stronger-than-expected GDP report comes amid increasing concerns about whether the U.S. will slip into a recession next year amid high inflation, a slowdown in Europe and rising Federal Reserve interest rates. While economists still fear the U.S. could hit a recession next year, the GDP rebound is further proof that the American economy had avoided one so far.
The strong headline numbers masked other signs of the U.S. economy slipping in key sectors.
Gross private domestic investment, a catchall category for money spent on things meant to grow the economy, fell 8.5 percent in the third quarter. The decline came as spending on structures sank 15.3 percent and spending on homes plunged 26.4 percent on the quarter.
Final sales to private domestic purchasers, which measures how much American households and firms bought from U.S. firms, also rose just 0.1 percent on the quarter.
Updated at 3:22 p.m.