US GDP growth slows sharply in the third quarter as consumers cut spending

A wave of COVID-19 cases, rising inflation and weakening federal financial lifelines slowed the pace of the US economic recovery in the third quarter.

The United States economy grew at a slower pace in the three months ending in September, as a wave of COVID-19 cases, rising inflation, and weakening federal financial life lines slowed the pace of the nation’s economic recovery.

The United States’ gross domestic product (GDP), which measures the value of goods and services produced by the economy, grew 2 percent in the third quarter from the same period a year earlier, the Bureau of Analysis said Thursday. Economic of the United States.

That initial reading marked a sharp slowdown from the second quarter when inflation-adjusted GDP grew 6.7 percent. The number of headlines for the third quarter was also below many analysts who had already dampened expectations.

“A resurgence of COVID-19 cases resulted in further restrictions and delays in the reopening of establishments in some parts of the country,” the BEA said in its press release Thursday. “Government assistance payments in the form of forgivable business loans, grants to state and local governments, and social benefits for households decreased.”

A sharp slowdown in consumer spending was behind the disappointing growth figures. Personal consumption grew a meager 1.6 percent on an annualized basis in the third quarter, compared with 12 percent in the second quarter.

A myriad of factors are blowing the wind off American consumers, whose spending accounts for roughly two-thirds of the nation’s economic growth.

A wave of COVID-19 infections fueled by the highly contagious Delta variant swept across parts of the country in the three months ending in September. Supply chain bottlenecks and continued shortages of raw materials pushed prices up for companies, many of which, in turn, passed them on to consumers. And as prices rose, many consumers had less money to spend, thanks to the decrease in government stimulus.



Reference-www.aljazeera.com

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