United States: Economy records slowest increase since Q2 2020 in the third quarter
GDP growth lost steam in the third quarter, easing to 2.0% in seasonally-adjusted annualized rate terms (SAAR), from 6.7% in the second quarter. Q3’s reading marked the worst result since Q2 2020.
The slowdown was driven by weakening momentum in domestic demand and a soft external sector. Private consumption growth fell to 1.6% in Q3, marking the weakest expansion since Q2 2020 (Q2: +12.0% SAAR), while fixed investment dipped 0.8% (Q2: +3.3% SAAR). Meanwhile, government consumption rebounded, growing 0.8% in Q3 (Q2: -2.0% SAAR).
Turning to the external sector, exports of goods and services dropped 2.5% in Q3 (Q2: +7.6% SAAR). In addition, growth in imports of goods and services moderated to 6.0% in the quarter (Q2: +7.1% SAAR).
On an annual basis, economic growth slowed markedly to 4.9% in Q3, following the previous quarter’s 12.2% increase.
Commenting on the outlook ahead, analysts at the EIU noted:
“We expect real GDP growth to remain above trend in 2022, at 3.8%. The public infrastructure package will support job creation and robust activity in construction, manufacturing and professional services. As the initial rebound from the crisis levels off, GDP growth is forecast to average 2.0% per year in 2023–26.”