- Despite the devastating impact of the pandemic, the U.S. economy is now growing faster than forecasters had expected before COVID-19 hit.
- Resilient consumer spending and employer hiring have powered the economy through every bump in the road.
- Economists are optimistic about the growth continuing in the near term.
The economy is doing better than almost anyone thought possible a few years ago and has even exceeded pre-pandemic expectations.
A report on third-quarter Gross Domestic Product released Wednesday hammered home the U.S. economy’s rapid recovery from the pandemic and the burst of high inflation that followed it. The 2.8% annual growth rate was below what economists expected just ahead of the report but was far above what forecasters four years ago anticipated.
In January 2020, the Congressional Budget Office forecasters predicted the economy would grow at an annual rate of 1.6% between 2023 and 2024. Instead, after plunging during the pandemic, economic growth came back with a vengeance and exceeded its previous high water mark.
“Overall, the U.S. economy continues to be surprisingly strong with growth well above what anyone would have expected six months or a year ago, inflation coming down, consumers very strong, and businesses investing at a high rate,” Jason Furman, a professor of economics at Harvard and former top economic advisor to President Barack Obama, posted on social media platform X.
Despite some bumps in the road, the most important parts of the economy have weathered every storm since the pandemic hit. Consumers have kept on spending and businesses have kept on hiring. Inflation has fallen back to near its pre-pandemic levels.
In 2022, many forecasters had expected the economy to dip into a downturn with high unemployment, as the Federal Reserve raised borrowing costs to combat inflation. Instead, the unemployment rate hit 50-year lows last year and has increased only modestly since then.
Many economists have become optimistic about the outlook going forward.
“Unless we’re hit with a shock, a recession looks unlikely to us,” Oren Klachkin, financial markets economist at Nationwide wrote in a commentary.