The U.S. economy grew in the third quarter of this year due to trade fluctuations, new home construction and consumer and government spending, the Commerce Department said Thursday in the final major economic report before the midterm elections.
The Bureau of Economic Analysis said the gross domestic product rose 2.6% at an annual rate in July-September, but economists say the bump masks underlying economic weaknesses and will likely be a mirage.
Investors still fear slowing growth in the fourth quarter and a downturn or recession in 2023.
The third quarter report was better than expected, however, and follows two negative quarters, enthusing Wall Street and giving the White House something to cheer for now.
“For months, doomsayers have been arguing that the U.S. economy is in a recession and congressional Republicans have been rooting for a downturn. But today we got further evidence that our economic recovery is continuing to power forward,” President Biden said. “This is a testament to the resilience of the American people.”
He said his signature tax and climate legislation will bring down prices for things like prescription drugs. And he said gas prices are better than they were in the summer, though told Congress it “must do more.”
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The bureau said the increase in exports was tied to both goods and services and led by industrial supplies, travel and financial services.
Increases in consumer spending on items such as health care were offset in part by a decrease in spending on cars and food and beverages. Federal government spending was driven by defense spending while state and local government spending was fueled by an increase in pay for government employees.
Capitol Hill Republicans this week predicted a “ghost” or “phantom” report in which growth was propped up by a surge in exports and government spending.
The Federal Reserve has been increasing interest rates to tame inflation. The actions are likely to spark a slowdown, particularly in the housing market, which is a key part of GDP.
Thursday’s report emerged less than two weeks before the midterm elections that will determine which party will control Congress.
Mr. Biden and Democrats latched onto the positive news in the third quarter, while Republicans, who have hammered the White House over its economic policies, pointed to overall weakness in growth and dark clouds ahead.
“Too many families are falling further behind and feel stressed about the future because of Democrats’ weak economy and record-high prices,” said Sen. John Barrasso, Wyoming Republican. “Republicans are united in undoing the Democrats’ failed economic policies and growing our economy once again.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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