CUNA Chief Economist Mike Schenk issued the following statement after the U.S. Commerce Department released its third-quarter gross domestic product (GDP) report:
“U.S. economic growth bounced back from two consecutive quarters of decline with a solid 2.6% increase in GDP. Exports, which were a key driver of the overall results, reflected a double-digit increase. Personal consumption, the biggest part of the economy, rose at a 1.4% pace. The report also reflected solid increases in business investment and government spending.
“The rebound was widely expected. CUNA’s baseline economic forecast called for the economy to grow by 2.5% in the third quarter and the consensus estimate amongst economists was 2.3%.
“Importantly, healthy economic growth will not last. The Federal Reserve’s recent aggressive policy response to stubbornly high inflation virtually guarantees that fourth-quarter output will decelerate – perhaps significantly. The Fed’s laser-focus on bringing inflation down with big increases in the Fed’s short-term market interest rate target has greatly reduced the affordability of a wide range of products & services including homes, autos, and other big-ticket items purchased on credit. Spending and borrowing will therefore undoubtedly take a big hit in the fourth quarter. The end result will be obvious and impactful labor market dislocations.”