ICYMI: Bidenomics in Action: Strong Economic Growth of 4.9% Last Quarter While Inflation Continues to Fall

Yesterday, we learned the American economy grew 4.9% in the third quarter while inflation continues to fall. While a year ago some forecasters predicted a 100% chance of recession, Wall Street is now directly crediting Bidenomics for "much stronger" growth this year. Under President Biden's leadership, the unemployment rate has been below 4% for 20 months in a row, real wages are up over the last year, and median wealth for American families has grown by a record amount accounting for inflation. President Biden never thought we'd need a recession or a spike in unemployment to bring inflation down—and he was right.

See Coverage and Remarks Below:

Director of the National Economic Council Lael Brainard at the Peterson Institute for International Economics – 10/27

BRAINARD: Similarly, comparing U.S. economic performance to other advanced nations tells a similar story: while many experts claimed that President Biden's economic plan would lead to worse tradeoffs between inflation and growth, in fact, the United States has brought inflation down faster than other advanced economies, while sustaining faster growth.

U.S. GDP has grown by a cumulative 7.4 percent since the quarter before the pandemic—the strongest growth among G7 economies.

At the same time, the United States currently has the lowest inflation of any G7 economy. When comparing inflation on a harmonized basis, the U.S. has lower headline—and core—inflation than our peers… While productivity data are highly volatile, and it is too early to draw firm conclusions, one thing is clear: the historic trifecta of the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the clean energy portions of the Inflation Reduction Act are boosting the supply side of our economy by catalyzing private sector investments in infrastructure, clean energy, and semiconductor manufacturing.

Chair of the Council of Economic Advisers Jared Bernstein on Bloomberg – 10/26

BERNSTEIN: Many people, including your own service, a year ago assured us we would be in a recession by now. We can talk about looking around the corner, that's harder these days. But I don't see how you could look at a jobs report that gave us 336,000 jobs, a retail sales report that came in double expectation and of course, this morning's GDP report with 4.9% growth. More than half of that contributed by consumer spending. I like to take a close shave with Occam's razor, when you have a 70% consumer spending economy and a full implement labor market, absent exogenous shocks or a policy mistake, you should be okay. Now, there is a lot of shocks out there and there's always potential for mistakes, and that's what keeps people like me busy. But the underlying structural growth that we have seen looks very solid to me.

Deputy Director of the National Economic Council Daniel Hornung on WTOC (CBS, Savannah GA) – 10/27

Hornung: It's been a hard two years coming out of the pandemic there is no question about that but what we have seen is real progress on bringing inflation down. That inflation rate was above 9 percent now it is well into the threes that means breathing room for folks at the grocery store at the gas station and we are seeing that at the same time where we have one of the strongest job markets that we have ever had in this country.

Deputy Director of the National Economic Council Daniel Hornung on K8 – 10/27

Hornung: I think as we start to tell the story more about just the contrasts that's out there, the President with his plans to grow the economy, as he says, from the bottom up in the middle out. Congressional Republicans, the prior administration, really focused on tax cuts for the wealthiest Americans and the largest corporations as their single most important economic policy. I think as that contrast becomes clear to the American people, you might start to see some improvement in those numbers.

Insider: The US economy is growing at the fastest pace in 2 years
[Madison Hoff, 10/26/23]

The Biden Administration celebrated the robust economic growth. Joelle Gamble, deputy director of the White House National Economic Council, told Insider recent GDP reports have shown robust growth — with consumer spending and manufacturing investments as two areas supporting this — while inflation is cooling. Gamble also said that both the US economy and workers are resilient. "I think the bottom line here is that we're seeing an economy that is growing strong, that is growing from the middle out and the bottom up, not the top down," Gamble said.

theSkimm: Money Newsletter with deputy director of the White House National Economic Council, Joelle Gamble:

GDP: Aka gross domestic product. Which is the total value of all products and services provided in a country within a specific time frame, like a quarter. It's used to track the overall health of the economy. Basically, the Apple Watch of the US economy.

Yesterday, the Commerce Dept said the US's GDP grew at a 4.9% annual rate last quarter — the biggest gain since 2021. "The economy is strong," Joelle Gamble, a deputy director of the White House National Economic Council, told Skimm Money. "The numbers we saw today, it means that consumers are still in a strong position."

The boost is thanks in part to a strong labor market and slowing inflation. More encouraging signs from the report: A boom in manufacturing, strong consumer spending, and a drop in core PCE inflation, aka personal consumption expenditures (think: cars and housing), which fell to its lowest level in almost three years.

Chair of the Council of Economic Advisers Jared Bernstein on Wall Street Journal What's News Podcast – 10/26

FERTOLI: Americans kept on spending this summer leading to a surge in economic growth. The Commerce Department said GDP grew at a seasonally and inflation adjusted 4.9% annual rate in the third quarter, exceeding analyst expectations. That was the fastest rate since late 2021. Joining me now with more on the report and what it means for the economy is Jared Bernstein, Chair of the White House Council of Economic Advisers. Welcome Jared, and thank you so much for being here.

BERNSTEIN: Thank you for inviting me.

FERTOLI: So first question, this report surprised a number of analysts. What was your reaction?

BERNSTEIN: My reaction, let me see, a nice number. It was somewhat expected, as I think you suggested. The expectation was that growth was going to be strong in Q3 because we get a lot of the ingredients of this report before we get the report itself, but 4.9% for the quarter was above the 4.5 that was expected. So even better than we'd hoped. I guess I'll say one thing on this. I have not been surprised at the pace of some of the gains that we've seen in the economy because I know the central importance of the U.S. job market. And our labor market has been extremely strong for a very long time. The unemployment rate's been below 4% for 20 months in a row. And when that happens, I have a lot of experience analyzing that kind of a dynamic. It's an area of my work. What you have is wage gains and recently because inflation has eased real wage gain supporting consumer spending, and that is a mechanism to generate the kind of growth rates we've seen in recent reports.

Bloomberg: Yellen Says GDP Data Show US Economy Is 'Doing Very Well'
[Christopher Condon and Peggy Collins, 10/26/23]

Treasury Secretary Janet Yellen said third-quarter growth data show the US economy is doing very well and that there is evidence of a soft landing, where inflation has eased without causing a recession. "It's a good, strong number and it shows an economy that's doing very well," Yellen said at an event in Bloomberg's Washington office Thursday. She said she is "not expecting growth at that pace to continue, but we do have good, solid growth." "We have what looks like a soft landing, with very good outcomes for the US economy," she said. She spoke hours after data showed the US economy grew at an annualized rate of 4.9% in the third quarter, the fastest pace in nearly two years. Robust consumer spending was a key driver, in turn supported by a persistently strong labor market. Unemployment in the US has hovered just below 4% for 20 consecutive months, and participation in the labor force has expanded, despite the Federal Reserve's most aggressive interest-rate hiking campaign in four decades. In another positive sign, a closely watched measure of underlying inflation cooled to its lowest level since 2020, Thursday's figures showed.

MSNBC: Resilient U.S. economy grew at a 'stellar' pace over the summer
Over the summer, the economy grew faster than in any quarter from Donald Trump's first three years in office. No wonder the White House is celebrating.
[Steve Benen, 10/26/2023]

Before the Commerce Department released its latest report on the strength of the U.S. economy, expectations were high that the data would show robust growth from the summer months. As NBC News reported, it turns out the economy "grew even faster than expected" in the third quarter. Gross domestic product, a measure of all goods and services produced in the U.S., rose at a 4.9% annualized pace in the July-through-September period, up from an unrevised 2.1% pace in the second quarter, the Commerce Department reported Thursday. Economists surveyed by Dow Jones had been looking for a 4.7% acceleration. The report added that the sharp increase in economic growth came as a result of strong consumer spending, businesses building up inventories, exports, residential investment, and government spending. The Washington Post's Heather Long described the latest GDP report as "stellar."

The 4.9% figure — which will be revised in future months — reflects the strongest economic growth since the fourth quarter of 2021. It's also stronger growth than in any quarter from Donald Trump's first three years in office.

PBS: U.S. economy grows 4.9 percent, shrugging off interest rates and defying recession forecasts
[Christopher Rugaber, 10/26/2023]

The nation's economy expanded at a robust 4.9 percent 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 percent 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.

Reuters: US third-quarter economic growth seen fastest in nearly 2 years
[Lucia Mutikani, 10/26/2023]

The U.S. economy likely grew in the third quarter at its fastest pace of any quarter in nearly two years, again defying dire warnings of a recession, as higher wages from a tight labor market helped to power consumer spending. […] President Joe Biden's administration has taken steps to encourage more semiconductor manufacturing in the U.S.

Most economists have revised their forecasts and now believe the Fed can engineer a "soft-landing" for the economy, citing expectations that the July-September period will show a continuation of second-quarter strength in worker productivity and moderation in unit labor costs. "We're seeing the exact opposite (of a recession)," said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. "The American consumer, the biggest engine of the U.S. economy seems to have had a mid-year resurgence, largely because confidence improved through the summer because of the rally in the stock market and steadier gasoline prices."

The Washington Post: U.S. economy grows at blockbuster pace in third quarter
[Abha Bhattarai, 10/26/2023]

The U.S. economy grew by an annualized rate of 4.9 percent in the third quarter, the strongest pace since 2021, as spending — by families, businesses and the government — accelerated, even in the face of fast-rising borrowing costs. New government data released Thursday by the Bureau of Economic Analysis shows that gross domestic product expanded between July and September, capping five straight quarters of growth and eluding a long-feared recession.

The economy's resilience is a product of a strong job market and extra pandemic savings, which have made it possible for people to keep spending despite inflation and rising interest rates. Robust government hiring — including 214,000 new jobs between July and September — also added to overall strength. What's particularly remarkable is that the economy grew so strongly amid the highest interest rates in more than 15 years, as the Federal Reserve tries to cool the economy down to curb inflation.

The Washington Examiner: Biden hails third quarter GDP growth as 'Bidenomics' triumph
[Haisten Willis, 10/26/2023]

President Joe Biden lauded strong economic growth and credited his policies for it. The economy grew by a 4.9% seasonally adjusted annual rate in the third quarter of this year, up from 2.1% the quarter before, the Bureau of Economic Analysis reported on Thursday morning. Biden said he was pleased with the figure. […]

"The unemployment rate has been below 4% for 20 months in a row, real wages are up over the last year, and median wealth for American families has grown by a record amount accounting for inflation," Biden said. […] "I hope Republicans in Congress will join me in working to build on this progress, rather than putting our economy at risk with reckless threats of a shutdown or proposals to cut taxes for the wealthy and large corporations, while slashing programs that are essential for hard-working families and seniors," Biden said.