The US economy grew at a robust 2.8% annual rate in the third quarter of 2024, unchanged from the initial estimate, according to the latest data released by the Commerce Department.
The growth was primarily fueled by strong consumer spending and a notable increase in exports, which helped offset slower business investment.
While the growth rate for the July-September period slowed from the 3% pace of the previous quarter, it still reflects the economy’s resilience, with growth surpassing 2% in eight of the last nine quarters. The US remains the world’s largest economy, demonstrating durable performance despite global and domestic challenges.
Consumer spending, which makes up around 70% of US economic activity, accelerated to a 3.5% growth rate in the third quarter, up from 2.8% in the previous quarter. This marked the fastest pace of consumer spending since late 2023. Exports also played a key role in the economy’s expansion, rising at a 7.5% annual rate, the largest increase in two years. However, both consumer spending and exports were slightly lower than initially estimated.
Despite these positive trends, business investment showed signs of weakness, particularly in the housing sector and nonresidential buildings such as offices and warehouses. On a more positive note, spending on equipment saw a sharp rise, providing some balance to the overall investment slowdown.
Looking at the economy’s underlying strength, the category that excludes volatile elements like exports, inventories, and government spending grew at a solid 3.2% rate in the third quarter, up from 2.7% in the prior period. This category includes key drivers of economic stability, such as private investment and consumer expenditures.
Inflation, which has been a concern for many Americans, remains in check. The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures (PCE) index, rose at a modest 1.5% annual pace in the third quarter, down from 2.5% in the second quarter. Core PCE inflation, which excludes food and energy prices, was 2.1%, a decrease from 2.8% earlier in the year.
Despite these positive signs, rising disposable income pressures and stagnant savings rates continue to present challenges for US consumers. Disposable personal income grew by only 2.3% in current dollars, and real income adjusted for inflation rose by just 0.8%. Personal savings also declined, with the savings rate falling to 4.3% in the third quarter.
President-elect Donald Trump will inherit an economy that shows steady growth and low unemployment at 4.1%, alongside a more moderate inflation rate. However, there are concerns about the sustainability of this growth, especially in light of persistent pressures on household budgets. Trump has promised an overhaul of economic policies, which could introduce new changes to trade and taxation, potentially impacting future economic performance.
The final report will be released on December 19.
The Associated Press and PYMNTS contributed to this report.
