Amidst labor disputes across the country, an expanding autoworkers strike, and growing international turmoil, the U.S. economy continues to exhibit notable resilience and growth.
Despite many households feeling the pressure of high inflation and interest rates, consumer spending overall has not weakened. Year-over-year spending surged by 5.8% in August, paralleling a 7.3% increase in disposable income, even as the Personal Consumption Expenditures Price Index rose 0.4% from July to August and 3.5% year over year.
The NRF’s October Monthly Economic Review reported a 2.1% increase in the gross domestic product (GDP) for the second quarter and a modest 1.8% growth year over year after adjusting for inflation. The data underscores continued economic growth—albeit at a weakened pace, suggesting that higher interest rates and stricter lending standards have a more profound impact than previously acknowledged.
Indicators hint at a cautiously optimistic outlook for the U.S. economy. For example, nonfarm payrolls gained 187,000 jobs in August. This increased from 157,000 in July but significantly below the average monthly gain of 271,000 over the past year. Also, the unemployment rate modestly increased by 0.3 percentage points to 3.8% in August.
The data underscores continued economic growth—albeit at a weakened pace—suggesting that higher interest rates and stricter lending standards have a more profound impact than previously acknowledged. The Federal Reserve is likely content that elevated interest rates have influenced the economy as anticipated.