WASHINGTON–Ideally, stronger consumer spending in the fourth quarter will help offset disappointing numbers for U.S. economic growth during the third quarter, one economist with CUNA is saying following the release of the new data.
The just-released government figures show the U.S. economy grew at the slowest pace of the recovery during the third quarter, according to the Commerce Department. Gross domestic product grew by an annualized 2.0% from July to September, a marked slowdown from earlier this year.
The Commerce Dept. data show spending on services during the third quarter did grow 7.9%. But limited availability of many products put a cap on consumer spending, which was up just 1.6% in the third quarter, down significantly from Q2’s 12% increase.
“Economic growth in the third quarter slowed down due to a temporary surge in the Delta virus, worsening supply chain disruptions and labor shortages,” said CUNA Senior Economist Dr. Dawit Kebede. “Consumer spending decelerated in this period because of declining auto sales due to computer chip shortages. Delta also slowed the increased momentum in travel and hotel spending seen in the previous quarter.
“As Delta cases continue to subside, there may be more growth in the fourth quarter as consumers will be more willing to spend on services involving in-person interactions. The supply chain challenges, however, will likely continue until next year making it difficult to satisfy increased consumer demand.”
The Commerce Department also reported labor force participation decreased in September, with some economists telling the Wall Street Journal they expect labor-force participation, or the share of Americans working or seeking a job, will never return to pre-pandemic levels.