At 2.7%, the pace of US gross domestic product growth, the broadest measure of economic activity, would pretty much be where it was before the pandemic. The growth rate in the third quarter of 2019, for example, was 2.8%.
So it’s not … terrible. It’s just bad news by recovery standards.
“Supply chain bottlenecks sharply curtailed activity last quarter despite the massive stimulus spending,” said economists at Action Economics.
For the Biden administration, it means the White House and lawmakers have their work cut out for them to get the recovery back on track.
Shortages everywhere you look
Over time, the supply chain gridlock should ease — or at least that’s the hope. But there is also a labor shortage holding companies back.
America’s workers are in hot demand, but many are still struggling with care responsibilities of their own and the risk of contracting the virus. Those millions of unfilled jobs also mean that workers can afford to wait until they find a good opportunity. In response, many companies are raising wages to attract potential employees.
Rising wages are definitely good for consumers, but Americans still had lots of other things to worry about in the third quarter.
Rising prices haven’t deterred consumers — at least so far. But there is worry that prices could eventually rise high enough that Americans would start closing their wallets.
“We expect a return to form for the American consumer in the final quarter of the year,” said Joe Brusuelas, chief economist at RSM US.
In fact, the hope for a robust holiday shopping season might already have helped with GDP growth in the third quarter: “The major catalyst for growth during the third quarter will almost certainly be a strong period of inventory building ahead of the traditional holiday shopping season,” Brusuelas said.