Economists were wrong when they predicted a failing U.S. economy prior to the midterm elections. In fact, President Joe Biden has been riding a rising economy, because Americans are comfortable buying. And buying they are. Between July and September, the economy grew faster than economists first gauged,, rendering their estimates inequitable.
The GDP (Gross Domestic Product) grew 2.9 percent, according to America’s Bureau of Economic Analysis (BEA):
‘[The GDP] grew at an annualized rate of 2.9 percent during the third quarter, according to a second estimate released Wednesday by the Bureau of Economic Analysis (BEA). The third quarter growth rate was revised 0.3 percentage points higher than the 2.6 percent annualized increase in GDP the BEA’s “advance” estimate in October.’
The BEA provided three separate predictors of America’s GDP quarterly. First, there was the “advance” estimate. Meaning economists provided an estimate determined by early data. The second predictor had additional data factored in, and third was the final, most accurate estimate.
So the BEA had to revise the GDP estimates higher. That was based on new data based upon the increases in American consumer spending. Business investments also rose in the third quarter. In addition, Americans cut back on imported goods and services with some tied to USA patriotism. Economists were wrong on their estimates there. The GDP grew more rapidly than anticipated, hence estimates had to be revised upward.
Global Economist at the Economist Intelligence Unit Cailin Birch said that “a decline in spending on goods and higher levels of household debt” might still occur. So are economists wrong about this, too? Birch said, according to The Associated Press (AP):
‘[M]ost signs have pointed to a resilient if slow-moving economy, led by steady hiring, plentiful job openings and low unemployment. Wednesday’s government report showed that the restoration of growth in the July-September period was led by solid gains in exports and consumer spending that was stronger than originally reported.’
Chief U.S. Economist at High Frequency Economics Rubeela Farooqi said:
‘Despite higher borrowing costs and prices, household spending – the driver of the economy – appears to be holding, which is a positive development for the near-term outlook.’
Farooqui continued, noting the third quarter was “firmer than expected:”
‘This means the largely consumer-led rebound in the third quarter was firmer than expected. However, this key component of GDP is showing some signs of weakening.’
The third-quarter results assuaged many fears that our country was headed for a recession. But certainly, economists’ opinions do affect outcomes. Just as the pollsters were wrong about the Republicans taking the House of Representatives, so too can economists be wrong. That means the fourth quarter economy will be telling.
The same economists predict a recession, but not this year. Now they believe one will hit in the first or second quarter of 2023. The Federal Reserve’s rapid interest rate increases have slowed the U.S. economic growth. But if not properly balanced and correctly timed, the increases could tip the country into a reversing economy.
Chief Economist at EY-Parthenon Gregory Daco said Wednesday:
‘Beneath the apparent strength, the underlying details of the [report] continue to paint the picture of a slowing economy with domestic demand stalling under the weight of elevated inflation and the most aggressive tightening cycle by the Federal Reserve since the 1980s.’
Americans’ and their businesses’ need for goods and services rose 0.5 percent in the third economic quarter. So economists revised their estimates upward. U.S. exports went up in the third quarter. And now economists believe that that number will drop based upon European recessions.
Christie writes Gloria Christie Reports & Three White Lions Substack newsletters and a Three White Lions podcast available on Apple, Spotify, etc. She is a political journalist for the liberal online newspaper The Bipartisan Report. Written in her own unique style with a twist of humor. Christie’s Mueller Report Adventures In Bite-Sizes a real-life compelling spy mystery (in progress). Find her here on Facebook. Or at Three White Lions her book on Amazon Kindle Vella and the Gloria Christie Three White Lions podcast on Apple, Spotify, etc