GDP report shows US economy grew a strong 4.9% in the latest quarter as Fed mulls rate hikes

Published

2 years ago

October 30, 2023

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The US economy grew a stellar 4.9% from July through September, driven by robust consumer spending despite the Federal Reserve’s efforts to slow the economy with high-interest rates.

Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product — the broadest gauge of the economy’s total output of goods and services — was the fastest quarterly advance in nearly two years.

Last quarters robust GDP growth was far above the 2.1% growth rate in the April-to-June quarter.

Despite inflation, the Commerce Department reported that Americans drove the economy by stepping up their spending, splashing out on everything from movies and Taylor Swift concert tickets to restaurant meals.

However, the economy is expected to experience a steady slowdown in the current October-to-December quarter and into early 2024, especially if the Fed implements another interest rate hike and the housing market remains sluggish.

A recent survey by CNBC-Morning Consult showed just that, with more than three-quarters of respondents, 76%, saying they plan to be frugal through the holidays.

Of the 4,403 US adults polled last month, 62% said they plan on budgeting sometimes or more often in the upcoming six months, CNBC found — during retailers all-important holiday shopping season.

On top of sky-high borrowing rates currently plaguing the housing market — the average long-term rate hit 8% for the first time since 2000 last week, per Mortgage Daily News — some 30 million Americans began repaying student loans, which could slow their ability to spend in the fourth quarter.

Those loan repayments had been suspended since the pandemic first struck three years ago.

Brisk consumer spending typically leads companies those that sell physical goods as well as those, like restaurants and entertainment venues, in the economys vast service sector to raise prices, thereby fueling inflation.

Fed officials have acknowledged the pickup in growth, which could potentially undercut their efforts to fight inflation, which rose 3.7% in September.

Last month’s advance was more than economists expected — and a sharp decline from June 2022’s four-decade high of 9.1% — though it’s still well above central bankers’ 2% goal.

A blockbuster September employment report revealed that the US economy added a whopping 336,000 jobs last month an unexpected surge that contradicts the notion the Fed may tamp down its aggressive tightening regime.

However, it still remains unclear whether the latest GDP figure will have much impact on the Fed’s upcoming Nov. 1 decision on interest rates, which officials have suggested may increase one more time ahead of the new year.

Fed Chari Jerome Powell said in a discussion at the Economic Club of New York last week: “We certainly have a very resilient economy on our hands.”

“Many forecasts called for the US economy to be in recession this year. Not only has that not happened; growth is now running for this year above its longer-run trend. So thats been a surprise,” he added.

If those trends continue, it could allow the Fed to achieve a highly sought-after soft landing, in which the central bank would manage to slow inflation to its 2% target without causing a deep recession.

At the same time, Powell has suggested that if the economy keeps growing robustly, the Fed might have to raise rates further. Its benchmark short-term rate — which affects the rates on many consumer and business loans — currently sits between 5.25% and 5.5%, a 22-year high.

Last month, Fed officials unanimously decided to hold the record-high rate steady for the second time in six policy meetings so far this year.

“Additional evidence of persistently above-trend growth could put further progress on inflation at risk and could warrant further tightening of monetary policy,” Powell said last week.

With Post wires.

Politics

The BBC’s billion dollar question

Published

3 hours ago

November 11, 2025

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👉Listen to Politics at Sam and Anne’s on your podcast app👈

With US President Donald Trump threatening to sue the BBC, how likely is the broadcaster to pay out? And how have those across the political spectrum been reacting?

And with 15 days until Chancellor Rachel Reeves’s budget, Matthew McGregor – the chief executive of campaign group 38 Degrees and a former digital strategist for both Labour and Barack Obama – takes issue with Sam’s take from yesterday and sends in a voice note.

And Sam and Anne discuss the latest twist in the Your Party saga, and it’s all about money.

World

At least 12 killed after suicide bombing in Pakistan

Published

4 hours ago

November 11, 2025

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At least 12 killed after suicide bombing in Pakistan

At least 12 people have been killed in a suicide bombing outside the gates of a court in Pakistan’s capital of Islamabad, the country’s interior minister has said.

At least 27 other people were also wounded after the bomber detonated his explosives next to a police car.

Interior minister Mohsin Naqvi said the attacker tried to “enter the court premises but, failing to do so, targeted a police vehicle”.

Mr Naqvi added that authorities are “looking into all aspects” of the attack.

No group immediately claimed responsibility for the explosion, but authorities have recently struggled with a resurgent Pakistani Taliban.

The explosion, which was heard from miles away, occurred at a busy time of day when the area outside the court is typically crowded with hundreds of visitors attending hearings.

More than a dozen badly wounded people were screaming for help as ambulances rushed to the scene.

“People started running in all directions,” said Mohammad Afzal, who claimed he was at the court when he heard the blast.

Pakistani security forces earlier said they foiled an attempt by militants to take cadets hostage at an army-run college overnight, when a suicide car bomber and five other attackers targeted the facility in a northwestern province.

The authorities blamed the Pakistani Taliban, which is separate from but allied with Afghanistan’s Taliban, but the group denied involvement in that attack on Monday evening.

The assault began when a bomber attempted to storm the cadet college in Wana, a city in Khyber Pakhtunkhwa province near the Afghan border.

The area had, until recent years, served as a base for the Pakistani Taliban, al Qaeda and other foreign militants.

According to local police chief Alamgir Mahsud, two of the militants were quickly killed by troops while three others managed to enter the compound before being cornered in an administrative block.

The army’s commandos were among the forces conducting a clearance operation, and an intermittent exchange of fire went on into Tuesday, Mr Mahsud said.

Pakistani Prime Minister Shehbaz Sharif denounced both attacks and said those responsible must be brought to justice swiftly.

“We will ensure the perpetrators are apprehended and held accountable,” he said.

Mr Sharif described attacks on unarmed civilians as “reprehensible”, adding: “We will not allow the blood of innocent Pakistanis to go to waste.”

UK

Police release update on Bob Vylan Glastonbury investigation

Published

5 hours ago

November 11, 2025

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Police release update on Bob Vylan Glastonbury investigation

Police say they have interviewed a man over comments made during punk-rap duo Bob Vylan’s set at Glastonbury.

A man in his mid-30s attended a voluntary interview with officers on Monday, Avon and Somerset Police said.

The outspoken punk duo sparked controversy with their performance at Glastonbury in June, when frontman Bobby Vylan led a chant of “death, death to the IDF” on stage.

Police said they had consulted the Crown Prosecution Service and received legal advice on the investigation in October.

“It has been important for us to have a full understanding of any legal precedents, which is a complex process, and therefore over the past couple of months we have been seeking early legal advice from the Crown Prosecution Service (CPS),” the force said in a statement.

“Following a review of the advice, a voluntary police interview was arranged to help us progress our enquiries… The matter has been recorded as a public order incident while we continue to investigate and consider all relevant legislation.

“Voluntary police interviews are commonly used in investigations where an individual agrees to attend and an arrest is not considered necessary, for example on the grounds of public safety or for the preservation of evidence. Attendees are interviewed under caution and have the same legal rights as anybody who is arrested.”

Bob Vylan’s set at Glastonbury was live-streamed by the BBC as part of its coverage of the festival, leading to fierce criticism of the corporation.

The BBC’s Executive Complaints Unit has since found the broadcast breached editorial standards related to harm and offence.

However, the unit’s findings cleared the corporation of breaching its guidelines relating to material that is likely to encourage or incite crime.

Following the performance, the BBC issued an apology to viewers, especially the Jewish community, and promised to take action to “ensure proper accountability”.

It also said it would no longer live broadcast “high risk” performances.