Q3 GDP Grows After Two Consecutive Quarters of Decline

By Manuel Gutierrez, Consulting Economist to NKBA

Real gross domestic product (GDP) increased at an annual rate of 2.6% in the third quarter, following a 0.6% decrease in the second quarter and a decline of 1.6% in the first quarter.

• Q3 growth was mostly driven by increases in exports (14.4%), nonresidential fixed investment (3.7%) and federal government spending (3.7%).
• Consumer spending rose at an annual rate of 1.4% in Q3, down from a 2% increase in Q2. 
• Residential fixed investments declined 26% in Q3, with single-family structures declining at an annual rate of 36.3% and multifamily structures falling 5.5%.
• Despite the modest Q3 improvement in GDP growth, the U.S. economy is generally stagnant. Total gross domestic spending is virtually the same as it was in Q4 2021. 
• Expectations for any GDP growth in the next few quarters are low.
• With inflation at 8.2%, the Federal Reserve is expected to raise rates in November and December to try to tame inflation, but many experts predict this will result in higher mortgage rates.
• Most experts are expecting a  mild recession in the coming year as the Federal Reserve continues to tighten financial conditions.