Reference News Network, December 25 report: According to Reuters, on December 23, the U.S. economy grew at its fastest pace in two years in the third quarter, driven by strong consumer spending and a significant rebound in exports. However, the growth momentum has apparently weakened recently due to rising living costs and the recent federal government shutdown.

The U.S. Commerce Department released data on the third-quarter U.S. gross domestic product (GDP) on the 23rd, with an annual growth rate of 4.3%, higher than expected, reflecting sustained investment by U.S. companies in equipment and artificial intelligence. Government spending (mostly for defense) also boosted the economy. The only factors that dragged down GDP growth were inventory investment and residential construction and sales expenditures.

Although the U.S. economy was operating at full speed last quarter, economists said that economic activity showed a "K-shaped" pattern, with high-income households and large corporations as the main support forces. Economists attributed this phenomenon to President Trump's policies, including high import tariffs, which have pushed up prices. Economists say that the stock market boom and high housing prices provided a buffer for high-income families against inflation, but low- and middle-income families have limited ability to afford alternatives.

Economists also said that, similarly, large companies have enough resources to offset the rising costs caused by import tariffs. In contrast, small businesses are struggling and must deal with the reduction of low-cost labor due to immigration restrictions.

According to the Japan Economic Newspaper, on December 24, data released by the U.S. Commerce Department on the 23rd showed that the U.S. GDP grew by 4.3% year-on-year from July to September, the highest growth rate in two years. While strong personal consumption supported rapid economic growth, the momentum of employment growth slowed rapidly. Although the Trump administration boasted about the effectiveness of its policies, there are still voices questioning their sustainability.

Employment in the non-farm sector in the third quarter of this year averaged a monthly increase of only 50,000, a sharp slowdown compared to the 210,000 per month in the fourth quarter of 2024.

Given that Federal Reserve Chair Powell pointed out that employment data is "systematically overestimated," with an estimated overestimation of about 60,000 per month, the actual employment growth may be stagnant or even negative. Some opinions point out that whether high growth without employment can continue faces three major questions.

First, the U.S. savings rate has dropped to a historic low. Under the condition of weak employment (i.e., low number of people receiving wages), can strong consumption continue? Economists who are skeptical are paying attention to the continuously declining savings rate. Between July and September, the increase in disposable income was zero for the first time since the outbreak of the pandemic, and the savings rate also fell from 5.2% in the first quarter to 4.2%.

Since the end of World War II, the U.S. savings rate has been below 5% only a few times: once between 1999 and 2001, before the collapse of the internet bubble; another time between 2004 and 2008, before the Lehman Brothers crisis. In 2022, the savings rate also declined, but at that time, the situation was that lockdown measures during the pandemic and cash subsidies led to excess savings, and people began to spend this extra money.

Usually, a decline in the savings rate means more consumption. The current rise in stock prices has boosted the consumption willingness of high-income groups, while also causing concerns about possible bubbles in the artificial intelligence industry due to overly high expectations.

The second factor casting doubt on the sustainability of consumption is the decline in consumer confidence due to the slowing employment. The Conference Board published on the 23rd the U.S. Consumer Confidence Index, which fell to 89.1, a significant drop from 98.7 in July.

Since Trump returned to the White House, consumer confidence in the U.S. once plummeted due to significant policy changes compared to previous administrations, but the economy remained strong. Now, with the reduction of policy uncertainty, people are increasingly worried about future income.

The third issue is the high cost of living. High inflation caused by tariff increases has placed a heavy burden on low-income groups. (Translated by Liu Lin, Hu Xue)

Original: toutiao.com/article/7587699850800579106/

Statement: This article represents the views of the author alone.