News

Economic Growth Slows as U.S. GDP Expands Moderately

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The U.S. economy experienced a revised 4.9% annual growth rate in the third quarter, marking an unexpected surge in expansion that has since tapered off towards the end of the year.

This growth is measured by the gross domestic product (GDP), which has been adjusted from the government’s previous estimate of 5.2%. Nevertheless, this still represents the largest increase in GDP in a decade, excluding the pandemic years of 2020-2021.

However, despite the ongoing growth, the pace has significantly cooled down. It is projected that GDP will only increase by a mild 1% to 2% in the final three months of 2023.

These figures have been adjusted to account for inflation.

Impact of Higher Interest Rates

One key factor contributing to the slowdown in economic growth is the impact of higher interest rates. As a result, consumers are scaling back their purchases of high-ticket items, and businesses are decreasing their investments. Additionally, the pace of hiring has also experienced a slowdown.

Nevertheless, there are currently no indicators of an imminent recession. The robust condition of the labor market has played a crucial role in driving consumer spending, allowing the economy to continue moving forward.

Market Outlook

In reaction to these developments, the Dow Jones Industrial Average (DJIA) and S&P 500 are anticipated to open stronger in Thursday trades.

It is essential to closely monitor future economic indicators to gain insights into the trajectory of U.S. economic growth and its potential implications for various market sectors.

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