Hit By Delta Surge, Supply Crunch And Tepid Consumer Spending, U.S Economic Growth In Third Quarter Slows Sharply

U.S. gross domestic product growth sharply decelerated to an 2% annualized rate in the third quarter, down from a 6.7% rate in the April-June quarter, the Bureau of Economic Analysis (BEA), a government agency under commerce department that provides official GDP, said today (Oct 28).

The deceleration in real GDP in the third quarter was led by a slowdown in consumer spending, restrictions due to resurgence of COVID-19 cases resulted in new restrictions and widespread disruptions in supply chain.

In the third quarter, effects of massive government stimulus also wore off government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased. Consumer spending rose a meagre 1.6% in the third quarter, well below the 12% rate in the prior three months.

This is the slowest growth rate since the 2020 recession.

Business investment rose 1.8% in the third quarter, down sharply from a 9.2% rise in the prior period.

In the U.S., the headline gross domestic product number reported every quarter by the BEA is expressed as percentage change in GDP from the previous quarter, annualized. Other countries, and many agencies like Organization for Economic Cooperation and Development (OECD), report just the quarterly percentage change and do not annualise.