The US economy grew at a 2.3 percent rate in the third quarter, slightly better than previously thought, the US Department of Commerce said on Wednesday, but prospects for a solid rebound are being clouded by the rapid spread of the Omicron variant of SARS-CoV-2.
The third and final look at the US’ GDP performance was higher than last month’s estimate of 2.1 percent growth.
The new-found buoyancy came primarily from more robust consumer spending than what was previously thought, as well as firms restocking their inventories more than initial estimates had revealed.
Photo: Reuters
The 2.3 percent gain compared with 6.3 percent growth in the first quarter and 6.7 percent growth in the second. The emergence of the Delta variant of SARS-CoV-2 in the summer was blamed for much of the slowdown in the third quarter.
With the appearance of the Omicron variant, coming on top of high inflation and lingering supply-chain issues, there are concerns that growth could be constrained heading into next year.
US President Joe Biden on Wednesday convened a meeting of his supply-chain disruptions task force virtually and in-person in Washington, where he touted what he said was significant progress in alleviating bottlenecks at ports, as well as easing other issues that had created shortages of goods and contributed to higher consumer prices.
Retail inventories are up 3 percent from last year and on-shelf availability for products is at 90 percent, close to where it was before the COVID-19 pandemic, Biden said.
“Packages are moving. Gifts are being delivered. Shelves are not empty,” Biden said.
Still, the uncertainties are of concern to many economists, who say that it is far too early to declare an all-clear on the threats posed by the Omicron variant.
“History is repeating itself with the coronavirus suddenly reappearing and dampening economic growth prospects,” Loyola Marymount University economics and business professor Sung Won Sohn said in Los Angeles.
Oxford Economics has trimmed its forecast for economic growth for the current quarter from 7.8 percent to 7.3 percent, which would still represent a sizeable rebound from the third-quarter slowdown.
Oxford chief US financial economist Kathy Bostjancic said that the resurgence of COVID-19 could reduce US growth next year from 4.3 percent to 4.1 percent.
A completely derailed Build Back Better legislative program could shave off another 0.4 percentage points next year, lowering it to about 3.7 percent, and chop off a half-point from growth in 2023, reducing it to below 2 percent, she added.
Economists expect the US’ GDP growth this year to come in at about 5.5 percent, which would be the best showing since 1984 and a reversal from last year, when the economy shrank by 3.4 percent and the global pandemic erased 22 million jobs early in the year.
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