US GDP Growth Revised Up to 3.1% in Third Quarter, Driven by Consumer Spending and Exports

The US economy grew at an annual rate of 3.1% in the third quarter of 2024, an upward revision from the initial estimate of 2.8%, according to the Commerce Department. The increase reflects stronger-than-expected consumer spending and exports, though partially offset by a decline in private inventory investment.

Key Growth Drivers

• Consumer Spending: Despite higher costs of living and reduced pandemic-era savings, robust consumer spending bolstered economic growth, supported by a strong jobs market.
• Exports: Accelerations in exports also contributed to the revised GDP figures.
• Federal Spending: Increased government expenditures played a role in the quarter’s improved performance.

In comparison, second-quarter GDP growth stood at 3.0%.

Economic Insights

Ryan Sweet, Chief US Economist at Oxford Economics, described the revisions as evidence of a solid economic foundation heading into 2025. However, he highlighted disparities in financial conditions:

• High-Income Households: Benefiting from a tight labor market and rising housing and stock market wealth.
• Low-Income Households: Struggling with financial pressures, a trend unlikely to change in the near term.

Looking Ahead

Sweet warned of potential volatility in inventories and net exports in early 2025, citing the looming threat of tariffs under President-elect Donald Trump, who takes office in January. Businesses may advance imports ahead of potential policy changes.

Despite these uncertainties, economists remain optimistic about steady economic performance into next year.