The gross domestic product (GDP), as defined by the Bureau of Economic Analysis (BEA), is the total dollar value of the goods and services produced in the United States. Americans can use the percentage change in GDP from one period to the next to determine how well their economy is performing.
According to preliminary estimates released Thursday by the BEA, GDP grew at an annual rate of 2.6% during the 3rd quarter, but essential factors remain to indicate an economic slowdown. This shows a reduction of 1.6% in the first quarter as well as a decline of 0.6% in the second.
Even if the overall GDP figure implies that the U.S. economy stayed resilient in the third quarter, several economists point to other important characteristics that can offer a truer perspective of the fundamental stability of the economy.
The National Bureau of Economic Research analyzes a wider range of economic output, such as employment, retail sales, and industrial production, prior to actually assessing when a recession begins and ends, even if such contractions meet an unofficial standard for recession. Despite weak but still robust employment growth, the majority of experts do not think that the United States is in a recession.
Despite higher interest rates and rising prices, consumer spending has increased as consumers have drawn down savings to continue spending on vacations, restaurant meals, and other on-site activities that many failed to notice previously in the pandemic.
The remaining three months of the year are projected to see a slight increase, followed by a contraction in the first and second quarters of 2023. The expectation of growth is 1.6% this year and 0.2% in 2023, following 5.7% growth last year, a 37-year high, as the economy recovered from COVID-induced losses.
By many standards, the economy is still solid for the moment. At 3.5 percent, unemployment is closest to historic lows, and many Americans can see wage rises. And although families and company owners report feeling worried about their finances and the prospects of the economy, business investment and consumer spending are nevertheless strong.
A proportion of the economic downturn this year can be linked to restoration to more typical growth rates after the economy grew at a rapid and unprecedented 5.7% rate last year as it rebounded from earlier pandemic disruptions. How consumers manage in the months ahead is going to have a significant effect on the economy’s direction.
About the author
Lesley Sabas Ruano is a third-year student studying Economics and Spanish at Santa Clara University. She is currently the Market Analyst Intern at the Economic and Trade Mission Office in San Francisco. She was born and raised in the Bay Area.
Write to Lesley Sabas Ruano at Lesley.SabasRuano@israeltrade.gov.il