USA on Growth Track: Economy Surprises with Strong Figures

The U.S. economy demonstrated remarkable momentum in the third quarter, driven by a strong increase in consumer spending and an intensification of government defense expenditures. Particularly noteworthy is the significant rise in employment, reaching its highest level in over a year. These positive figures fuel hope for a "soft landing" of the economy. The inflation-adjusted gross domestic product rose by 2.8% year-on-year in the third quarter, following a 3% increase in the previous quarter, according to a preliminary government estimate released on Wednesday. Consumption, the largest component of economic activity, increased by 3.7%, reaching its highest rate since early 2023. The rise was especially pronounced in goods such as cars, furnishings, and leisure items. Concurrently, a closely watched measure of underlying inflation increased by 2.2%, roughly aligning with the Federal Reserve's target, as indicated by data from the Bureau of Economic Analysis. "There's hardly anything to criticize about this scenario," wrote economists Carl Weinberg and Rubeela Farooqi from High Frequency Economics in a memo. "A steady normalization of interest rates at a moderate pace is exactly what the economy needs, no more." In another noteworthy move, Capital Group and KKR have partnered to launch two funds for wealthy private clients, investing in both public and private debt markets. This partnership is further evidence of how traditional asset managers are seeking higher fees by managing illiquid and riskier assets and benefiting from the rapid growth of private credit.