The US economy grew at an annual rate of 2.6% between July and September, ending two consecutive quarters of contraction and trailing very high inflation and interest rates.
The Commerce Department reported Thursday that the country’s GDP, the largest gauge of economic output, rose in the third quarter after shrinking in the first half of 2022. Strong exports and steady consumer spending, supported by a healthy job market, helped restore growth. For the world’s largest economy.
Still, the outlook for the US economy has turned bleak. The Federal Reserve has aggressively raised interest rates five times this year to fight chronic inflation and will do so again next week and in December. Fed Chairman Jerome Powell has warned that Fed hikes will bring “pain” in the form of high unemployment and possibly a recession.
The government’s latest report on GDP comes as Americans, concerned about inflation and recession risks, have begun voting in a midterm election that will determine whether President Joe Biden’s Democratic Party retains control of Congress. . Inflation has become a signature subject of Republican attacks on the way Democrats have run the economy.
With inflation still close to a 40-year high, stagnant price increases are putting pressure on households across the country. Also, rising interest rates have derailed the housing market and are likely to cause more damage over time. The longer Russia’s war in Ukraine drags on, the bleaker the prospects for the world economy.