US economic growth revised higher, jobless claims drop
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The news: US economic growth in the third quarter was stronger than reported last month thanks to consumer spending, while jobless claims fell sharply last week, hinting at a still-resilient economy amid revived inflation concerns.
The context: The fresh data comes a day after the Federal Reserve cut its benchmark rate for the third time this year to 4.25%-4.50% while signalling fewer rate cuts for 2025, citing the economy’s surprising strength.
The numbers: The Bureau of Economic Analysis said GDP in the July-to-September quarter was revised up from 2.8% to 3.1%—the fastest pace in over a year. In a separate release, the US Department of Labor said jobless claims fell 22,000 to 220,000.
Consumer spending grew at 3.7%, driving the upward GDP revision, which also included upward adjustments to exports and domestic demand as private inventory investment was revised downward.
Initial jobless claims had spiked by 17,000 the prior week and are now in a period of volatility, typical for the holiday season. But continuing jobless claims, a proxy for the number of people receiving benefits, also eased slightly to 1.874 million.
Treasury yields steepened further, with the 10-year rising to 4.56%, as investors weighed Fed Chair Jerome Powell’s remarks, ongoing uncertainty under President-elect Donald Trump’s policies, and chaos in the US Congress after Trump and Elon Musk torpedoed a bipartisan funding bill less than two days before federal agencies face a shutdown.
What they said: “This week’s data show the economy is set to end 2024 on a solid note, which is fortunate since we’ll have to contend with heightened policy uncertainty and possibly greater challenges in 2025,” said Nationwide economist Oren Klachkin. “We think the Fed maintains an easing bias, but the bar for rate cuts just got higher.
The sources: US Department of Labor , Bureau of Economic Analysis , Bloomberg , Reuters
