NATIONAL NEWS

US economy grew at 2.3% rate in Q3, up from earlier estimate

Dec 22, 2021, 9:10 AM
FILE: Trucks carrying shipping containers line up as they prepare to be offloaded onto a container ...
FILE: Trucks carrying shipping containers line up as they prepare to be offloaded onto a container ship at the Port of Oakland on October 14, 2021, in Oakland, California. (Photo by Justin Sullivan/Getty Images)
(Photo by Justin Sullivan/Getty Images)

WASHINGTON (AP) — The U.S. economy grew at a 2.3% rate in the third quarter, slightly better than previously thought, the Commerce Department said Wednesday. But prospects for a solid rebound going forward are being clouded by the rapid spread of the latest variant of the coronavirus.

The third and final look at the performance of the gross domestic product, the nation’s total output of goods and services, was higher than last month’s estimate of 2.1% growth.

The new-found strength came primarily from stronger consumer spending than what was previously thought, as well as businesses rebuilding their inventories more than initial estimates revealed.

The 2.3% third quarter gain follows explosive growth that began the year as the country was emerging from the pandemic, at least economically. Growth soared to 6.3% in the first quarter and 6.7% in the second quarter. The emergence of the delta variant in the summer was blamed for much of the third quarter slowdown.

Now with the appearance of the omicron variant, coming on top of high inflation and lingering supply chain issues, there are concerns that growth could be constrained heading into 2022.

Those fears have sent the stock market on a turbulent ride in recent days, although new optimism that the omicron risks will be manageable sent the Dow Jones industrial average up 560 points Tuesday.

All major U.S. markets rallied this week, but all are in negative territory over the past 30 days.

Economists say it is far too early to declare an all-clear on the threats posed by the new variant.

“History is repeating itself with the COVID virus suddenly reappearing and dampening economic growth prospects,” said Sung Won Sohn, an economics and business professor at Loyola Marymount University in Los Angeles.

Oxford Economics has trimmed its forecast for economic growth for the current quarter from 7.8% to 7.3%, which would still represent a sizable rebound from the third-quarter slowdown.

After Sen. Joe Manchin voiced opposition to his party’s spending plans, Goldman Sachs cut its GDP forecast to 2% from 3% for the first quarter, 3% from 3.5% for the second quarter, and 2.75% from 3% in third quarter.

Kathy Bostjancic, chief U.S. financial economist for Oxford, said the firm’s current assessment was that the resurgence of COVID-19 could reduce growth next year from 4.3% to 4.1% and that if Biden’s Build Back Better program is completely derailed, that could likely shave another 0.4 percentage points in 2022, lowering it to around 3.7% and chop a half-point from growth in 2023, reducing it to below 2%.

She said under these assumptions, job growth could be 750,000 lower by this time next year if economic growth slows as much as she fears.

“Omicron has been so rampant,” Bostjancic said. “We think it is going to take a pretty big toll on economic activity.”

And it is not just the resurgence of COVID that could hold the economy back next year. Inflation has spiked to the highest level in nearly four decades, prompting the Federal Reserve to start pulling back the massive amounts of support it has been providing to the economy as it switches from trying to boost job growth to fighting inflation.

Economists expect GDP growth this year to come in around 5.5%, which would be the best showing since 1984 and a reversal from last year when the economy shrank by 3.4% and the global pandemic erased 22 million jobs early in the year.

Wednesday’s report showed that consumer spending, which accounts for two-thirds of economic activity in the U.S., grew at a 2% rate in the third quarter, down from the 12% surge in the April-June quarter, but up from last month’s estimated quarterly gain of 1.7%.

It is the uncertainty of what is to come, however, that is now concerning economists.

“The omicron variant poses a downside risk in the near term as do supply-chain disruptions and shortages that could be a constraint for households and businesses over coming months,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

KSL 5 TV Live

Top Stories

National News

Guns of many varieties are organized by type and caliber for use in training, and to fix malfunctio...
DON THOMPSON, Associated Press

Personal info on California gun owners wrongly made public

The California Department of Justice says it wrongly made public the personal information of hundreds of thousands of gun owners in their state-operated databases.
19 hours ago
The American Heart Association added sleep duration to its cardiovascular health checklist. It's a ...
Megan Marples, CNN

Sleep duration matters for heart health, according to new recommendations

If you needed another reason to get enough sleep, here it is: It may help your heart health.
19 hours ago
FILE: Former President Donald Trump speaks at a rally on September 25, 2021 in Perry, Georgia. Repu...
MICHAEL R. SISAK, Associated Press

Judge ends Trump contempt order after lengthy legal fight

A New York judge has ruled that former President Donald Trump is no longer in contempt of court.
19 hours ago
FILE (Getty Images)...
Associated Press

Police: Virginia toddler left in car dies, father kills self

A toddler accidentally left in a vehicle for hours died Tuesday and police said his father was found dead in an apparent suicide at their Virginia home.
19 hours ago
Cameron Diaz is making a new movie with Jamie Foxx. (Weiss Eubanks/NBCUniversal/Getty Images via CN...
Leah Asmelash, CNN

Cameron Diaz is coming out of retirement, thanks to Jamie Foxx

After an eight-year hiatus, Cameron Diaz is making movies again.
19 hours ago
(KSL TV)...
Associated Press

Feds looking at finances of Native American boarding school

One of the few boarding schools for Native American students run by the federal government in Oregon is looking closely at the school’s finances by the feds.
19 hours ago

Sponsored Articles

hand holding 3d rendering mobile connect with security camera for security solutions...
Les Olson

Wondering what security solutions are right for you? Find out more about how to protect your surroundings

Physical security helps everyone. Keep your employees, clients, and customers safe with security solutions that protect your workplace.
Many rattan pendant lights, hay hang from the ceiling.Traditional and simple lighting....
Lighting Design

The Best Ways to Style Rattan Pendant Lighting in Your Home

Rattan pendant lights create a rustic and breezy feel, and are an easy way to incorporate this hot trend into your home decor.
Earth day 2022...
1-800-GOT-JUNK?

How Are You Celebrating Earth Day 2022? | 4 Simple Ways to Celebrate Earth Day and Protect the Environment

Earth Day is a great time to reflect on how we can be more environmentally conscious. Here are some tips for celebrating Earth Day.
Get Money Online...

More Ways to Get Money Online Right Now in Your Spare Time

Here are 4 easy ways that you can get more money online if you have some free time and want to make a little extra on the side.
Lighting trends 2022...

Lighting Trends 2022 | 5 Beautiful Home Lighting Trends You Can Expect to See this Year and Beyond

This is where you can see the latest lighting trends for 2022 straight from the Lightovation Show at the Dallas World Trade Center.
What Can't You Throw Away in the Trash...

What Can’t You Throw Away in the Trash? | 5 Things You Shouldn’t Throw in to Your Trash Can

What can't you throw away in the trash? Believe it or not, there are actually many items that shouldn't be thrown straight into the trash.
US economy grew at 2.3% rate in Q3, up from earlier estimate