The US economy grew by 2.8% in the third quarter of 2024, roughly in line with expectations. Private consumption and investment in equipment in particular increased. This continues the strong expansion of recent quarters. We see this as confirming our assessment that the US economy will not slide into a recession despite high key interest rates because overall financing conditions are still quite favorable, Commerzbank’s economists Dr. Christoph Balz and Bernd Weidensteiner note.
The US economy continues to grow strongly
“This applies in particular to private domestic final purchases (PDFP), i.e. gross domestic product excluding inventory investment, government spending and foreign trade. Federal Reserve Chairman Powell has emphasized this figure on several occasions because it provides a clearer signal of the trend in demand. In the third quarter, PDFP increased 3.2%.”
“This is one of a series of six quarters with fairly stable and strong growth between 2.5% and 3.5%. Although key interest rates are quite high, financing conditions in the overall economy remain favorable in view of record high equity prices and low risk premiums.”
“Today's figures confirm our assessment that the US economy should avoid a recession. That said, it is unlikely to be able to maintain the high pace of growth seen in recent quarters as the extremely high level of immigration, which also supported demand, is not likely to be repeated. Furthermore, the labor market is cooling on trend, which is why private consumption should lose momentum. However, a more accurate outlook for 2025 will only be possible after the election.”
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