US economy growth stronger than expected in third quarter

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San Pedro, CA - August 25: An aerial view of the The Port of Los Angeles in San Pedro, Thursday, Aug. 25, 2022. The Port of Los Angeles is the nations gateway for international commerce and is the busiest seaport in the Western Hemisphere. Located in San Pedro Bay, the Port stretches along 43 miles of waterfront. The Vincent Thomas Bridge, a 1,500-foot-long suspension bridge, crosses Los Angeles Harbor in Los Angeles, and links San Pedro with Terminal Island. (Allen J. Schaben / Los Angeles Times via Getty Images)
Originally Published: 30 NOV 22 08:35 ET
Updated: 30 NOV 22 09:23 ET

(CNN) — The US economy grew much faster than expected in the third quarter, according to the latest gross domestic product report, which showed GDP rose by an annualized rate of 2.9%.

That’s an improvement from the initial government reading in October that showed 2.6% growth in economic activity, and better than the Refinitiv forecast of 2.7%. And it’s a marked turnaround from economic contractions of 1.6% in the first quarter of the year and 0.6% in the second.

The better-than-expected growth came as consumer spending increased more than in the goverment’s previous reading, while the value of imports was revised down. Imports are subtracted from GDP, which is the broad measure of economic activity within the country.

The strong reading does not necessarily remove the risk forecast by many economists of the US economy falling into recession at some point in the next year.

But the stronger-than-expected growth shows the resilience of the economy as it deals with the headwinds caused by the Federal Reserve’s aggressive course of large interest rate hikes in an attempt to slow the economy in order to tame decades-high inflation.

The US labor market, which will be measured again when Friday’s November jobs report is released, remains strong, with employers still hiring and unemployment near a half-century low. And while consumers are struggling with higher prices, they continue to spend money. More than two-thirds of US economic activity is driven by consumer spending.

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