The U.S. economy posted its first period of positive growth for 2022 in the third quarter, at least temporarily easing inflation fears, the Bureau of Economic Analysis reported Thursday.
GDP, a sum of all the goods and services produced from July through September, increased at a 2.6% annualized pace for the period, against the Dow Jones estimate of 2.3%.
That reading follows consecutive negative quarters to start the year, meeting a commonly accepted definition of recession, though the National Bureau of Economic Research is generally considered the arbiter of downturns and expansions.
The growth came in large part due to a narrowing trade deficit, which economists expected and consider to be a one-off occurrence that won’t be repeated in future quarters. GDP gains also came from increases in consumer spending, nonresidential fixed investment and government spending.
Declines in residential fixed investment and private inventories offset the gains, the BEA said.
The report comes as policymakers fight a pitched battle against inflation, which is running around its highest levels in more than 40 years. Price surges have come due to a number of factors, many related to the pandemic but also pushed by an unprecedented fiscal and monetary stimulus that is still working its way through the financial system.
The underlying picture from the BEA report showed an economy slowing in key areas, particularly consumer spending and private investment.
Consumer spending as measured through personal consumption expenditures increased at just a 1.4% pace in the quarter, down from 2% in the second quarter. Gross private domestic investment fell 8.5%, continuing a trend after falling 14.1% in the second quarter. On the plus side, exports rose 14.4% while imports dropped 6.9%.
There was some good news on the inflation front.
The chain-weighted price index, a cost-of-living measure that adjusts for consumer behavior, rose 4.1% for the quarter, well below the Dow Jones estimate for a 5.3% gain. Also, the personal consumption expenditures price index, a key inflation measure for the Federal Reserve, increased 4.2%, down sharply from 7.3% in the prior quarter.