U.S. Economy Surges Beyond Expectations in Q3

The U.S. economy grew at an annual rate of 3.1% from July to September, surpassing previous forecasts. This growth was driven by strong consumer spending as well as an increase in exports. According to data released by the Department of Commerce, the growth in the third quarter exceeded the 3% increase recorded from April to July. This marks eight instances of growth above 2% in the last nine quarters.

Consumer spending accounts for about two-thirds of U.S. economic activity, and it rose rapidly by 3.7% in the third quarter, marking the fastest increase since the first quarter of 2023. Exports increased by 9.6%, while business investment grew at a modest rate of 0.8%. However, equipment investments rose by 10.8%. Federal government spending and investment showed an increase of 8.9%, with a notable 13.9% rise in defense spending.

Unemployment claims fall below expectations In the U.S., unemployment claims fell more than expected last week, indicating a slowing labor market. According to the Department of Labor, new claims for state unemployment benefits decreased by 22,000 to 220,000 for the week ending December 14. Economists participating in a Reuters survey had predicted 230,000 claims for the last week. Fluctuations in claims may complicate a clear assessment of the labor market.

Last week's unemployment claims raised the four-week average of weekly claims by 1,250 to 225,500. Additionally, the decline in insurance claims indicates that layoffs are at low levels. In the long term, the duration of unemployment reached a three-year high average in November.

Fed lowers policy rate but uncertainty persists The Federal Reserve (Fed) lowered its policy interest rate again on Wednesday, citing progress in combatting inflation. However, the Fed's projection to cut rates only twice in the next two years led to a significant sell-off on Wall Street. The expected four rate cuts in September were trimmed to two due to the resilience shown by the economy and persistent high inflation.

Fed Chairman Jerome Powell noted that negative risks in the labor market have decreased, and the current economic expansion is largely supported by low layoffs. However, uncertainties regarding the new administration are raising concerns among economists. Issues such as tariffs on imported goods and tax cuts proposed by President-elect Donald Trump could lead to inflationary pressures.

U.S. labor market signals continued strength According to the November unemployment report, the U.S. labor market continued to strengthen. The U.S. added 227,000 jobs in November, compared to only 36,000 jobs added in October due to strikes and natural disasters. Additionally, the employment increase for September and October was revised upward by 56,000.

Data on unemployment claims to be released next week will provide further insights into the health of the labor market in December. It is noted that the resilience in the labor market has contributed to economic expansion in conjunction with strong consumer spending.