Slower ride likely ahead for US economy

The economy of the United States has been on a strong recovery track since the beginning of the year, and according to Federal Reserve predictions, the US GDP may achieve an annualized year-on-year growth of 5.6 percent in the third quarter, which will be the highest expansion spurt in nearly 20 years.

There are many driving forces behind such a strong uptrend to be sure. But the basic logic behind the reacceleration of the US economy, as far as we are concerned, stems from the staggered transformation of US economic growth momentum in its economic cycle. In 2021 and 2022, its economic growth was largely driven by consumption — mainly durable goods — and nonresidential property investment. Heading into the second half of 2022 and the third quarter of this year, service consumption and residential property investment continued to support another acceleration of the US economy.

From the perspective of spending, although the Fed's continuous interest rate hikes have pushed the benchmark interest rate to record highs, excess savings of the household sector have been supporting private consumption expenditures to maintain a strong growth level. At the same time, affected by the lack of existing housing inventory, homebuyers are shifting their focus to new homes, thereby boosting the growth rate of housing investment.