WASHINGTON – America’s real gross domestic product (GDP) increased at a whopping 4.9 percent in the third quarter of 2023 and the U.S. economy continues to outpace global peers, exhibiting more strength than forecasters anticipated along three key dimensions: growing economic output, labor market resilience, and slowing inflation.
The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The increase in consumer spending reflected increases in both services and goods. Within services, the leading contributors were housing and utilities, health care, financial services and insurance, and food services and accommodations. Within goods, the leading contributors to the increase were other nondurable goods (led by prescription drugs) as well as recreational goods and vehicles. The increase in private inventory investment reflected increases in manufacturing and retail trade. Within nonresidential fixed investment, a decrease in equipment was partly offset by increases in intellectual property products and structures.
Compared to the second quarter, the acceleration in real GDP in the third quarter reflected accelerations in consumer spending, private inventory investment, and federal government spending and upturns in exports and residential fixed investment. These movements were partly offset by a downturn in nonresidential fixed investment and a deceleration in state and local government spending. Imports turned up.
Meanwhile, the U.S. Department of the Treasury released an analysis of data this week from the IMF’s latest World Economic Outlook and other international sources that shows that the U.S. economy continues to outpace global peers and has exhibited more strength than forecasters anticipated throughout 2023 along three key dimensions: growing economic output, labor market resilience, and slowing inflation.
“The progress we have made on growth, labor markets, and inflation stands out across the globe, and remains an important source of strength for the global economy,” according to the Treasury Department, which offered the following further details on the bright economic news:
The resilience of the entire global economy is a testament to the President’s economic plan, as well as our work with partners around the world to effectively coordinate efforts to recover from the pandemic and support the global economy. In particular, the U.S. policy environment is a clear contributor to U.S. economic performance. The Biden Administration’s focus on supply-side measures via the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act is working to expand our productive capacity to create space for faster growth without stoking inflation. Indeed, the October 2023 IMF World Economic Outlook attributes the improved global outlook partly to the strength of the United States economy. Our supply-side investments are not just bolstering the U.S. economy but supporting the global economic outlook as well.
Key takeaways from the analysis:
- The United States has seen a particularly strong GDP recovery and is on track to return to pre-pandemic trend growth this year.
- Global labor markets continue to strengthen, and the United States has been especially resilient.
- U.S. inflation has cooled sooner and more quickly than in other advanced economies.
Stronger-than-expected U.S. growth continues to drive surprises to the upside in global growth in 2023, and the IMF notes that the likelihood of a hard landing has receded and the downside risks from last spring have moderated. While risks for the U.S. economy remain, the progress we have made underscores the value of a swift and growth-oriented policy response while making important investments in our economy’s long-run productive capacity.
The full report is available here.
Statement from President Joe Biden on Third Quarter 2023 GDP Report:
I always say it is a mistake to bet against the American people, and just today we learned the economy grew 4.9% in the third quarter. I never believed we would need a recession to bring inflation down – and today we saw again that the American economy continues to grow even as inflation has come down. It is a testament to the resilience of American consumers and American workers, supported by Bidenomics—my plan to grow the economy by growing the middle class. The unemployment rate has been below 4% for 20 months in a row, real wages are up over the last year, and median wealth for American families has grown by a record amount accounting for inflation. Just yesterday, the UAW and Ford reached a historic tentative agreement that provides a record raise to auto workers and is a testament to our strategy for a powerful manufacturing future made in America, with good, union jobs. I hope Republicans in Congress will join me in working to build on this progress, rather than putting our economy at risk with reckless threats of a shutdown or proposals to cut taxes for the wealthy and large corporations, while slashing programs that are essential for hard-working families and seniors.
