US ECONOMIC GROWTH ACCELERATED TO STRONG 4.9% RATE LAST QUARTER AS CONSUMERS SHRUGGED OFF FED HIKES

The nation’s economy expanded at a robust 4.9% annual rate from July through September as Americans defied higher prices, rising interest rates and widespread forecasts of a recession to spend at a brisk pace.

The Commerce Department said the economy expanded last quarter at the fastest pace in nearly two years — and more than twice the 2.1% annual rate of the previous quarter.

Thursday’s report on the nation’s gross domestic product — the economy’s total output of goods and services — showed that consumers drove the acceleration, ramping up their spending on everything from cars to restaurant meals. Even though the painful inflation of the past two years has soured many people’s view of the economy, millions have remained willing to splurge on vacations, concert tickets and sports events.

“This is just a very resilient economy that continues to take hit after hit and keep on,” said Joseph Brusuelas, chief economist at RSM, a tax and consulting firm.

Yet the robust growth may prove to be a high-water mark for the economy before a steady slowdown begins in the current October-December quarter and extends into 2024. The breakneck pace is expected to ease as higher long-term borrowing rates, on top of the Federal Reserve’s short-term rate hikes, cool spending by businesses and consumers. Economists have projected that growth could slow to an annual pace of just 1.5% in the final three months of this year.

One sign of the coming slowdown, Brusuelas said, was a 3.8% drop in business spending on new machinery and other equipment last quarter. That pullback likely reflected the higher cost of borrowing to finance such purchases.

And other key drivers of growth in the July-September period could prove short-lived. They include a surge in stockpiled goods that businesses added to their warehouses and store shelves. The buildup in these inventories accounted for about a quarter of last quarter’s growth from July to September and isn’t considered likely to be repeated.