The economy’s resilience is a product of a strong job market and extra pandemic savings, which have made it possible for people to keep spending despite inflation and rising interest rates. Robust government hiring — including 214,000 new jobs between July and September — also added to overall strength.
“It’s enough to knock me over with a feather,” said Diane Swonk, chief economist at KPMG. “We’ve had the most aggressive credit tightening from the Federal Reserve since the 1980s and, guess what, the economy’s accelerating. We really underestimated how much consumers could keep spending."
As long as they have jobs they will spend.
Does anyone have numbers that show how much of that growth came from the private sector and how much came from the government sector?
Should be in the excel file linked near the bottom of the article.
Seriously. The last pandemic payment went out 2 1/2 years ago. How long do these writers think a thousand or two lasts with today’s consumers?
“Oh yes, Helen, I put our $1,000 pandemic payment into a lottery ticket and won $50,000, and we’re still living off that.”
Baloney. Consumers cannot be spending “at this rate” and still have it be due to a check they got over 30 months ago. Period.
How much came from horribly expensive hellcare?
Of the 4.9%, about 0.8%.
Change annualized GDP $27.6 trillion 4.9% Govt. 4.7 4.6%
Plenty of old pharts in the reporting business thought rates go up and the GDP slows. Macy’s pointed to their credit cards being maxed out.
I have said repeatedly that demand-side economic recessions are shallow. Obviously, this is not even a shallow recession.
The FED will be hiking rates? I am not interested in the odds so I really have no clue if the FED will hike rates.
Asset values are problematic. That I think is the FED’s real target. The corporations are not earning their valuations by and large.
From the article:
The economy’s resilience is a product of a strong job market and extra pandemic savings, which have made it possible for people to keep spending despite inflation and rising interest rates.
I can’t speak for others, but we deposited all our covid money from the Treasury Department directly into our checking account.
Then I specifically directed our bank not to disburse our Covid money, but rather use the other dollars in our account to pay our bills.
So, despite Goofy’s rant, I am completely confident that the specific Covid money we received is still in our checking account earning a healthy 0.00003% annual interest rate.
The bank said something about dollars being fungible, but I replied it is the bank’s responsibility to ensure my dollars don’t get any fungus on them.
So we’re still living large off the Covid money interest income. Which is taxable, of course.
God bless America.
Let us say it…
This President and the Congress in 2022 have arranged policy matters for an incredible economy.
You can NOT argue here who is better in politics.
You have to face that the economic policies put in place work.
Or you do not have to face the policies work and we can write you off.
The policies are enacted laws that we can discuss here.
Just plain vicious! LOL,
I completely agree. It’s pure nonsense to reference those pandemic support checks that went out 30 months ago. But it would be reasonable to reference things like mortgage and rent forbearance that is much more recent. And student loan payment deferments that are also quite recent (up to last month!).
Gross domestic product increased at a 4.9% annualized rate last quarter…Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, accelerated at a 4.0% rate after only rising at a 0.8% pace in the second quarter. It added 2.69 percentage points to GDP growth, and was driven by spending on both goods and services. US economy delivers blockbuster performance in third quarter | Reuters
2.69/4.9 = 55%. The majority of Q3 2023 inflation was due to a rise in consumer spending.
The price index for gross domestic purchases increased 3.0 percent in the third quarter, compared with an increase of 1.4 percent in the second quarter (table 4). The personal consumption expenditures (PCE) price index increased 2.9 percent, compared with an increase of 2.5 percent.2 days ago
This would mean to me in simpler math a 1.9% real GDP growth rate. Which is much less than the nominal rate.
We need economies of scale, EoS, to bring down inflation into the 2% ballpark. We need EoS to bring up the pace of growth considerably. We can do this on the current path. That path is threatened by people with zero economic policies to offer.
And yet we read “Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023…”
Apologies I misspoke.
@DrBob2 I was adjusting the 4.9 as if it was not real. But it is. My 1.9 figure is wrong.
Nice catch. Lazy morning I did not look it up.
Related but separately
A quick search for the velocity of money currently brought up this result. Quick search is not bring up the current figure for the velocity of money. It might be telling.
What is the velocity of money inflation rate?
If the velocity of money is increasing, then the velocity of circulation is an indicator that transactions between individuals are occurring more frequently. A higher velocity is a sign that the same amount of money is being used for a number of transactions. A high velocity indicates a high degree of inflation.
The velocity of money is GDP/Money Supply.
For a given real GDP, higher velocity means lower money supply. You are thus saying that lower money supply indicates more inflation.
Interesting. The Fed would disagree I think.
“Inflation is caused when the money supply in an economy grows at faster rate than the economy’s ability to produce goods and services. In our auction economy the production of goods and services was unchanged, but the money supply grew from round one to round two. Because the money supply grew, and the output of goods and services did not grow, our economy experienced inflation.”
I am not saying a lower money supply. I am saying the money supply is changing hands more which is the velocity of money. The more it changes hands the more demand there is in the economy.
The velocity of money does not lower the money supply. It enlarges the money supply. It is the most important dynamic of the money supply.
If the velocity of money is GDP/Money Supply, then
Money Supply = GDP/Velocity
For a given GDP, increased velocity means you need less money circulating. It doesn’t decrease the supply, but if the Fed doesn’t reduce the money supply then there is increasing inflationary pressure.