US GDP Growth Falls Short of Expectations at 2.8% in Q3

News Summary:

　　The United States' GDP expanded at an annualized rate of 2.8% in the third quarter, falling short of market expectations of 3.0%.

　　Lead:

　　The US Bureau of Economic Analysis reported on Wednesday that the US gross domestic product (GDP) increased by 2.8% in the third quarter of 2024, which is less than the anticipated 3.0% growth forecast by economists, marking a decline from 3.0% in the previous quarter.

　　Main Body:

　　According to the preliminary estimate released by the US Bureau of Economic Analysis (BEA), the annualized GDP growth rate of 2.8% in Q3 2024 indicates a slower pace of economic expansion in comparison to the previous quarters robust growth. This performance reflects general weaknesses, as the economy continues to grapple with fluctuating demand and mounting inflationary pressures.

　　The data stands in stark contrast to the market forecast of a 3.0% increase, which many analysts had expected, considering the steady growth trends observed earlier in 2024. The previous quarters growth had bolstered optimism regarding the resilience of the US economy, particularly following a series of supportive fiscal and monetary policies. However, the latest figures serve as a reminder of ongoing challenges such as inflation and geopolitical tensions that can impact economic activity.

　　In addition to the GDP growth figure, the report highlighted key inflation metrics. The GDP price index rose by 1.8% in the July to September period, falling from a higher increase of 2.5% recorded in Q2. This change suggests a moderation in inflationary pressures on the economy, although concerns remain about longer-term trends. Furthermore, the core personal consumption expenditures (PCE) price index exhibited a quarterly rise of 2.2%, exceeding analysts' expectations of 2.1% but lower than the 2.8% growth observed in the previous quarter.

　　The market has reacted to this mixed information, with the US dollar gaining ground following the GDP release. The US dollar index (DXY) surged to daily highs around 104.40, supported by further gains in yield curves, which reflects optimism from investors regarding the dollar's stability in light of the report. Early trading shows that the dollar has notably strengthened against major currencies, including the euro and British pound.

　　Statements from economic analysts elucidate the potential impacts of the reported growth rates. "Investor sentiment could be influenced by the latest GDP figures and upcoming Federal Reserve monetary policy decisions,“ said a forex market analyst from FXStreet. ”A strengthening dollar may prevail in anticipation of a rate cut or other federal actions in November.

　　Looking ahead, the Federal Reserve is expected to take these newly reported growth levels into account during its next monetary policy meeting. Investors are pricing in a near certainty of a 25-basis-point rate cut next month, as the Fed continues to navigate balancing economic growth against inflation control.

　　The doubts surrounding slower growth may also lend support to the Feds decision-making process in the coming months, as officials navigate the complex interplay of domestic consumption, inflation rates, and international economic pressures. With personal consumption expenditures accounting for a significant portion of the US GDP, a continued slowdown in consumer spending could weigh heavily on economic projections.

　　Conclusion:

　　In summary, the US economy's 2.8% GDP growth in Q3 2024 has raised concerns among analysts and investors, as this figure is lower than anticipated. Despite this, the dollar's performance improves in response to possible Fed adjustments in policy. While looking ahead, the Fed's efforts to foster economic resilience against inflation will be critical, particularly as external influences continue to shape the domestic landscape. Moving forward, how the markets adjust to these developments and how the Federal Reserve interprets them will play a significant role in shaping economic predictions for the forthcoming quarters.

　　Sources:

　　[US Bureau of Economic Analysis]

　　[Trading Economics]

　　[FXStreet]

　　[MacroTrends]