An underlying measure of demand that excludes volatile categories like trade and inventories - which don't signal much about the economy's health - also came in strong. Final sales to domestic purchasers, adjusted for inflation, rose to 3.5% from 2.8% in the second quarter. This indicates a broader economic resilience that is not easily derailed by fluctuations in trade or inventory levels, highlighting the robust nature of domestic economic activity.
Solid hiring and wage growth have helped support activity. Despite certain anecdotes suggesting lower-income consumers are retreating, the overall consumer spending remained robust, which is essential for maintaining economic momentum. This discrepancy suggests that localized economic challenges aren't reflective of nationwide performance where larger spending trends prevail.
Consumer spending explains much of the most recent quarter's robust activity. Personal consumption expenditures increased at a 3.7% annualized rate, up from 2.8% in the second quarter. This category accounts for almost 2.5 percentage points of overall growth, showcasing the vital role of consumer behavior in shaping economic health.
The Biden White House noted that this is the last quarter of GDP data that will be released before the next administration takes over; Q4 data isn't due out until post-inauguration in late January. Moreover, top economic adviser Lael Brainard emphasized, 'Consumer spending is up, and so are savings, on the back of good job opportunities, rising real wages and renewed optimism,' reiterating confidence in the economy’s trajectory.
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