Surprising Strengths In All Economic Areas Undergird GDP Growth

Most economists who had to describe healthy, stable growth would end up largely describing today’s GDP numbers. The economy expanded at an annual inflation-adjusted rate of 2.8% in the third quarter of 2024, after expanding at 3.0% in the previous quarter. Outside of volatile inventory build ups, economic growth actually accelerated. Income growth from continued employment growth and wages outpacing prices is driving consumer spending. U.S. companies prove to be highly competitive in global markets across a wide spectrum of goods and services. Businesses continue to invest at fairly high levels to take advantage of new opportunities in a highly dynamic economy. And, government spending bolsters longer term growth through infrastructure investments. The economy is chugging along at a healthy pace, while businesses and governments are laying the foundation for continued growth at the same time.

The economy is fundamentally strong. GDP has expanded for ten consecutive quarters. The economy is now $2.4 trillion larger than it was at the end of 2019, just before the Covid-19 pandemic. This means that the economy has grown by 11.4% in less than five years – or at an annual rate of 2.3% —, despite a massive recession during this period. Over the last four years, from the third quarter of 2020 to the third quarter of 2024, the economy expanded at an annual inflation-adjusted rate of 3.0%. The current growth rate is right in line with its longer-term average, suggesting that the economy has found a solid footing.