US Economy Surprises with 3.1 % Growth In Q3

The United States surprises with an economic performance well beyond expectations for the third quarter. According to data from the Department of Commerce, the gross domestic product (GDP) grew by 3.1 %, compared to an initial estimate of 2.8 %. This result exceeds the forecasts of observers and reflects a dynamic economy, driven by the strength of household consumption and an improvement in exports. While many regions of the world struggle to maintain their economic momentum, as evidenced by the forecast of limited growth at 0.7 % for the Eurozone in 2024, this progression informs about the resilience of the American economy in the face of global uncertainties. These figures also highlight the impact of the recent monetary decisions of the Federal Reserve, which has fostered an environment conducive to growth through adjustments of interest rates.

U.S. Growth in Full Acceleration

The U.S. Department of Commerce announced that the economic growth of the United States reached 3.1 % in the third quarter of 2024, thus exceeding the initial forecasts of 2.8 %. This result also exceeds the expectations of analysts, who were anticipating stability around the previously estimated level. Such performance primarily relies on two key factors: an increase in exports and an acceleration in household consumption expenditures, which grew by 3.7 %, compared to an initial estimate of 3.5 %.

To better interpret this data, it is worth noting that the annualized rate, a preferred method in the United States, allows projecting quarterly developments over the entire year. This sheds more light on the strength of American economic fundamentals in a context where other economies struggle to find their momentum. In comparison, the Eurozone is only forecasting growth of 0.7 % in 2024 according to the European Central Bank, highlighting the growing gap between the two regions. Nevertheless, American dynamics are not homogeneous. Private investments, which are a traditional engine of growth, have been partially revised downward. This decline could indicate areas of fragility in the economy, necessitating particular vigilance in the coming months. Such nuances reinforce the need for a thorough analysis of this exceptional growth.

Impacts on Markets and Projections

Financial markets reacted favorably to the announcement of this economic performance. As soon as Wall Street opened, major indices reported notable increases. Thus, the Dow Jones rose by 0.67 %, the S&P 500 showed an increase of 0.77 %, while the Nasdaq jumped by 0.97 %. These figures reflect investors’ optimism, encouraged by the enduring strength of the American economy despite global uncertainties.

In this context, the Federal Reserve adjusted its forecasts for 2025. On December 18, it anticipated a growth of 2.1 %, a figure slightly higher than previous estimates. This readjustment fits into a strategy of measured monetary policy. The institution, while continuing to lower its interest rates, signaled a slowdown in this cycle. Furthermore, the Fed’s chairman, Jerome Powell, stated that the adopted approach will be “cautious”, with only two new cuts envisioned in 2025, compared to four initially planned.

Moreover, projections for inflation have also been modified. The PCE index, a key indicator for assessing inflationary pressures, is now estimated at 2.5 % for the end of 2025, before returning to 2 % in 2026. These adjustments reflect the Fed’s desire to strike a balance between stimulating growth and controlling inflation. However, this monetary caution may also signal an acknowledgment of upcoming challenges, particularly regarding the economy’s ability to maintain this pace without creating imbalances. These prospects raise questions about the sustainability of the favorable conditions that have underpinned this remarkable growth.

These adjustments reflect the Federal Reserve’s efforts to reconcile robust growth with control of inflation. If the forecasts materialize, the American economy could continue to play a leading role globally, raising questions about the long-term viability of such dynamism. The upcoming figures, expected in January, will be decisive in assessing the strength of this trajectory and the potential adjustments necessary to maintain a balance between economic expansion and financial stability.

Luc Jose A.

Diplômé de Sciences Po Toulouse et titulaire d’une certification consultant blockchain délivrée par Alyra, j’ai rejoint l’aventure Cointribune en 2019.
Convaincu du potentiel de la blockchain pour transformer de nombreux secteurs de l’économie, j’ai pris l’engagement de sensibiliser et d’informer le grand public sur cet écosystème en constante évolution. Mon objectif est de permettre à chacun de mieux comprendre la blockchain et de saisir les opportunités qu’elle offre. Je m’efforce chaque jour de fournir une analyse objective de l’actualité, de décrypter les tendances du marché, de relayer les dernières innovations technologiques et de mettre en perspective les enjeux économiques et sociétaux de cette révolution en marche.

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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.