Thanks to strong private consumption and the “booster” AI, the growth of the US economy is impressive. But experts warn that the positive development is unlikely to last - after all, it is "not a fantastic world."
Despite the Iran war, the US economy grew surprisingly strongly in the summer. Gross domestic product (GDP) rose by 3.4 percent annually in the third quarter, as the US Department of Commerce announced in an initial estimate. Economists surveyed by the Reuters news agency had expected 3.2 percent for July to September, after plus 2.2 percent in the spring. “Despite all adversities, the US economy remains on a robust growth path,” said Bastian Hepperle from Bank Bethmann HAL. "This is a fantastic development, but not a fantastic world." Because artificial intelligence is a growth booster that will lose momentum in the future. “The consumption story is also not a never-ending story.”
US consumer spending increased by an annualized 3.8 percent in the past quarter. “Private consumption continues to provide support despite inflation, high fuel prices and rising interest rates,” said USA expert Stephan Bales from the KfW development bank. At the same time, the AI investment boom has been boosting growth for months. "However, AI is increasingly being financed through debt, which makes growth more vulnerable to sudden liquidity crises. Without the shock absorber of equity, a lack of profits and high interest rates quickly lead to payment problems."
Analyst Hepperle warned: "In order to keep the pace of consumption high, private households cannot constantly fall back on their savings." After the midterm elections for the US Congress at the beginning of November, there are unlikely to be any new, costly government spending programs. “An economic slowdown is also inevitable due to tighter financing conditions.”
In the USA, economic growth data is published on an annualized basis. This method is not used in Europe, which is why the numbers are not directly comparable. To get a growth rate comparable to Europe, you would have to divide the US rate by four.
Fed gives US economy very good report
The US Federal Reserve left the key interest rate unchanged on Wednesday shortly before the midterm elections in the USA. The key monetary policy rate therefore remains in the range of 3.75 to 4.00 percent. However, experts on the financial market firmly expect that the monetary authorities around Fed boss Kevin Warsh will tighten their monetary policy again and increase interest rates at the end of the year. “In view of this growth, the US Federal Reserve should not hesitate to decide on a key interest rate increase at its committee meeting in December,” said LBBW analyst Dirk Chlench, referring to the GDP data on the interest rate outlook.
The Fed described inflation as "further elevated" - experts see this as a signal for a future interest rate hike. The Fed gave the US economy a very good report: “Productivity growth is strong and investment activity is robust,” it said in the text accompanying the interest rate decision.
After the Iran war started by US President Donald Trump and the Israeli government at the end of February, energy costs for companies and consumers have risen sharply. The increased cost of living is also one of the dominant issues in the US election campaign. In the congressional elections on November 3rd, Trump's Republicans could lose their slim majorities in both chambers of parliament, the House of Representatives and the Senate.
