The third quarter GDP report on the US economy points to an economic recovery and quells fears of an impending recession, President Joe Biden’s key economic adviser has said. The US economy grew at a better-than-expected 2.6 per cent annual rate from July through September, snapping two straight quarters of economic contraction and overcoming high inflation and interest rates.
Thursday’s estimate released by the Commerce Department revealed that the country’s GDP grew in the third quarter after having shrunk in the first half of 2022. “I think, we have some real momentum here,” Jared Bernstein, member of the White House Council of Economic Advisers, told PTI on Thursday. Referring to the latest report on the US economy, Bernstein said: “That’s a solid growth rate and it means that the economy expanded in the third quarter of this year.” For months, doomsayers have been arguing that the US economy is in recession and Congressional Republicans have been rooting for a downturn. But Bernstein reckoned that the GDP report points to a more upbeat snapshot of the US economy.
“An unemployment rate of 3.5 per cent, thousands of jobs created every month, a GDP growth rate of 2.6 per cent in the third quarter, none of these statistics are at all consistent with recession,” he explained. Inflation has become a festering issue, and consumer spending, which accounts for about 70 per cent of US economic activity, has expanded at a 1.4 per cent in the third quarter, down from a 2 per cent rate from April through June.
“Now, we also know we have a Federal Reserve that’s increasing interest rates as they must do in order to reduce inflation. And that’s cooling the housing sector. We saw today’s report as well. But we still think that the job market and consumer spending is strong,” Bernstein noted. “And that has a lot to do with a couple of things. The strong job market is probably the biggest factor. The fact that we have the lowest unemployment rate in over 50 years, 10 million jobs created since President Biden took office, 7,00,000 of them in the manufacturing sector, is a really important sector to keep growing,” he said. Last quarter’s growth also got a major boost from exports, which grew at an annual pace of 14.4 per cent.
“Exports were strong, and that’s also partly related to the fact that our supply chains are doing better. They’re considerably less snarled up relative to where they used to be. And that’s helping goods get from ship to shelf,” he said.Even with the historic economic recovery, gas prices are falling – down USD 1.25 since the summer, and down over the last three weeks.Bernstein points this to the steps taken by President Biden.
“In March, President Biden announced a release of 180 million barrels of oil from our strategic reserves. We had Russia invading Ukraine around that time. That’s an area where a lot of energy and food is supplied to the world. So, it was a time to go into that strategic reserve, and help offset the commodity impact of Putin’s invasion,” he said. “That helped increase the global supply of energy and thereby put some downward pressure on prices at the pump. They’re down at about USD1.25 off their peak,” Bernstein added.