Economic Update – Nov 2022
- After contracting in the first two quarters of 2022, the U.S. economy rebounded in the third quarter, expanding 2.6% at the annual rate. Strength in consumer spending on services, government, net exports and nonresidential fixed investment boosted real gross domestic product. At the same time, goods spending was a drag on growth, along with the housing market and inventory spending.
- Despite the improvement in activity in the third quarter, there continue to be significant downside risks in the economic outlook, with the risk of a recession elevated. The current forecast is for real GDP to increase 1.8% in 2022 on an annual basis, with 0.7% growth in 2023.
- Personal income and spending both increased in September. Manufacturing wages and salaries rose 0.7% for the month. Over the past 12 months, total wages and salaries have increased 8.2%, with manufacturing wages and salaries jumping 8.8% year-over-year. The personal saving rate fell to 3.1% in September, which was just shy of the 3.0% rate in June, which was the lowest since April 2008.
- Personal disposable income, which rose 0.4% in September, was essentially flat when adjusted for chained 2012 dollars. This suggests that inflation erased the income gains earned for the month. On a year-over-year basis, real disposable personal income has fallen 2.9%.
- In the latest employment cost data, private manufacturing wages and salaries rose 1.3% in the third quarter, with 5.2% growth over the past 12 months, the fastest pace in the history of the data series, which dates to the beginning of 2001.
- Americans continue to feel anxious about inflation and the outlook. In the University of Michigan and Thomson Reuters survey, consumer sentiment improved largely on stronger assessments of current economic conditions. Consumers were more pessimistic in their views of the next six months, however, a finding that was also seen in the Conference Board report.
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