U.S. economy grows for 1st time in 6 months

The U.S. reported growth of 2.6 percent in the third quarter, the first increase in 6 months, The Washington Post reports. The increase comes as the threat of recession looms overhead, and just ahead of midterm elections where inflation has been a pressing issue.

However, according to The New York Times, experts say it's too early to celebrate. Michael Gapen, chief U.S. economist for Bank of America said "[i]gnore the headline number — growth rates are slowing." While consumer spending, 70 percent of U.S. economic activity, grew at a 1.4 percent annual pace, it is still less than the 2 percent growth in the second quarter, reports The Associated Press.

There is also the possibility that the growth is short-lived since much of it came from the rise in exports as well as government spending, AP continues. Growth from exports will be difficult to sustain as the value of the dollar goes up and makes goods pricier.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

Economists also expect consumer spending to decrease in the future as businesses and consumers pull back in the face of rising interest rates, the Post continues. Said slump is still projected to cause a recession. The rising interest rates also affected housing investment, with the sector shrinking by 7.4 percent in the third quarter, the Times reports.

Some promising news is a price index in the GDP data increased at a 4.1 percent annual rate in Q3, down from 9 percent in Q2, which could lead the Federal Reserve to slow its rate hikes.