The economy is tanking as inflation picks up and the job market remains tight. Not a good look.
According to the Wall Street Journal:
The U.S. economy grew by 2.0% in the third quarter, with the Delta variant of Covid-19 and supply issues dampening gains.
Such a pace marked a sharp slowdown from robust gains earlier this year. Gross domestic product grew at a historically fast annual rate of 6.3% in the first quarter and 6.7% in the second quarter as an infusion of government stimulus, widespread business reopenings and rising vaccination rates fueled spending.
Those spending drivers faded from July to September. Two additional factors arose over the summer to damp third-quarter growth: a surge in virus cases and deepening supply bottlenecks.
The Commerce Department’s third-quarter GDP estimate released Thursday said consumer spending rose at an annual rate of 1.6% in the third quarter, a sharp slowdown from a 12% increase in the prior quarter. That reflected weakness in spending on long-lasting goods whose availability was limited by supply issues.
Supply-chain disruptions such as backups at U.S. ports and overseas manufacturing disruptions contributed to a sharp increase in inflation and pose a risk to the economic outlook. Despite supply-side challenges, many analysts expect the economy to regain momentum in the final months of the year as long as Covid-19 cases continue to fall.