The latest economic report for the United States indicates that the economy has experienced an impressive growth of 4.9% in the last quarter. This is a significant improvement from the 2.1% recorded in the second quarter and 2.2% in the first quarter. The growth was mainly attributed to personal consumption, which contributed 2.69 percentage points, followed by investment, which added another 1.47 percentage points. Exports and public consumption also played a significant role, contributing 0.68 and 0.79 percentage points, respectively.
It is, however, surprising to note that import demand had a negative contribution of -0.75 percentage points, which is contrary to what the United States is known for – its huge import demand. The increase in the U.S. trade deficit between January and August this year, which rose by an average of 19.8% on a year-on-year basis (Figure 1).
Furthermore, the fiscal year 2023 recorded a federal government spending that exceeded revenue by $1.7 trillion, which translates to a 23% increase in the national deficit from the previous year (Figure 2). It is concerning that the country has recorded budget deficits for 51 months so far since 2019, which raises concerns about excessive borrowing to fund economic growth.
As such, these trends have sparked concerns even though the recent economic growth rate of 4.9% demonstrates the U.S. economy’s resilience.
