The US economy experienced significant growth in the recent three months, registering its fastest pace in almost two years, contrary to the anticipated slowdown due to the Federal Reserve's monetary tightening. The Bureau of Economic Analysis's advance estimate revealed a 4.9% annualized growth in the third quarter's GDP, surpassing Bloomberg survey's consensus forecasts of 4.5%. This growth rate also exceeded the second quarter's revised GDP growth of 2.1%. Despite the concerns of a slowdown, the US consumer resilience has been notable, but economists envisage this quarter as the zenith of economic growth before the Federal Reserve's credit tightening impacts business and consumer spending. EY Chief Economist Greg Daco predicts a subdued real GDP growth of 1.4% in 2024 post an expected 2.4% growth in 2023 due to tighter credit conditions and a fragile global economic scene. The critical inquiry for investors hinges on whether the Federal Reserve's tightening is adequate to moderate the economy from its robust third quarter, as Federal Reserve Chair Jerome Powell emphasizes the necessity of slower economic activity to ensure price stabilization. Powell acknowledged the resilience of the US economy, defying recession forecasts and surpassing its longer-run trend for the year.
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