NOVEMBER 1, 2021 – ECONOMIC GROWTH FALLS OFF IN Q3
The US economy grew at the slowest pace since mid-2020, at a seasonally adjusted rate of 2.0 percent, in the third quarter. Economic growth was curtailed by the surge in the Delta variant of the virus and supply-chain issues; the first half of the year was driven by government stimulus packages, businesses reopening and the uptake of the covid vaccine, all of which waned as the year went on.
The good news is economists are expecting a rebound in growth as consumer demand builds and the pandemic eases in the upcoming months, though lingering supply chain issues are not expected to resolve for a while. Spending on services grew by 7.9 percent annualized in the third quarter. Limited product availability held consumer spending to 1.2 percent in Q3, down precipitously from the 12 percent growth experienced in Q2. An example is spending on cars, down 54 percent over the summer as a result of shortages, not demand.
Once the bottlenecks in the supply chain are worked out, which is expected to be in the second half of 2022, the economy should take-off.