Hindered by increasing COVID-19 cases and persistent supply shortages, US economic growth slowed to an annual rate of 2% during the July-September period, the weakest quarterly growth since the start of the recovery from the pandemic recession last year.
Thursday’s Commerce Department report estimated that the country’s gross domestic product – its total output of goods and services – has fallen sharply from annual growth rates of more than 6% in each of the previous two quarters.
But now, with the decline in confirmed cases of COVID-19, the rise in vaccination rates, and the increase in the number of Americans venturing to spend money, many economists believe GDP is rebounding at a rate of 6% or even better in the current fourth quarter.
Airlines have reported an increase in passenger traffic, companies are spending more on equipment and wages are rising as employers struggle to attract more people to the workforce. A pickup in consumer spending could help boost the economy as the end of the year approaches.
At the same time, however, rising prices, especially for gasoline, food, rent, and other basic items, are placing a burden on American consumers and eroding the benefits of higher wages. Inflation has become a threat to economic recovery and a major concern for the Federal Reserve as it prepares to begin withdrawing the emergency aid it provided to the economy following the recession in the last year.