US GDP grew at an annual rate of 2.6 percent in the July to September period. (file)
Washington:
The US economy bounced back in the third quarter, expanding for the first time this year ahead of the midterm election in welcome news for President Joe Biden, government data showed on Thursday.
Economic issues have become a flashpoint in the United States, with decades of high inflation weighing on growth and squeezing families.
Fears of a recession in the world’s largest economy have intensified after two quarters of negative growth, which is generally seen as a strong sign that a recession is underway – a trend that will have global consequences and domestic political costs.
But in the July-September period, GDP grew at an annual rate of 2.6 percent, according to the latest data from the Department of Commerce.
Economic performance was helped by strong trade, even as weak consumer spending on commodities impacted growth as higher prices cut.
Industrial supplies and materials, especially petroleum and products, kept exports strong.
But in consumer spending, growth in services led by health care and other sectors was “partially offset” by declines in products such as motor vehicles and parts, as well as food and beverages, the data showed.
The US economy shrank 0.6 percent in the second quarter, according to revised data, after a big decline in the first three months of this year.
Biden has insisted the US economy is on the right track, but analysts have warned of risks ahead, as families grapple with rising prices and shrinking their savings.
– further risk –
Republicans have blamed Democrats for raising prices through runaway spending, although inflation is a global issue over which presidents have limited power.
With prices soaring on supply chain shocks caused by Covid-19 lockdowns and the fallout from Russia’s invasion of Ukraine, families have been battling decades of high inflation this year, driving up food and energy costs.
And analysts caution that risks are rising in the coming months, as household spending could weaken further.
To ease price pressure, the US central bank has begun aggressive interest rate hikes as it tries to avoid propelling the economy into a recession.
Already, there are signs of stress, such as weakening in the housing sector, which is more sensitive to interest rates, said Rubila Farooqui, chief US economist for High Frequency Economics in a recent analysis.
Federal Reserve officials are expected to press for a hike in rates at a meeting of policymakers next week, in the face of persistently high prices.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)