Last week, the third-quarter GDP data came out. In the final estimate for third-quarter gross domestic product, the latest data told the story of an accelerating economy.

Third-Quarter GDP Exceeds Expectations

The final estimate for the third-quarter gross domestic product showed the economy accelerated at an annual rate of 3.2%. Thus, the third-quarter GDP figures exceeded expectations.

Earlier in 2022, GDP declined 1.6% in the first quarter. Similarly, it fell 0.6% in the second quarter of 2022. That said, this most recent report reflects a break in the pattern.

Exploring the Increase in Third-Quarter GDP Data

When exploring the increase in third-quarter GDP data, the story begins with advances in exports. Likewise, federal, state, and local government spending also rose alongside consumer spending. Last but not least, nonresidential fixed investment climbed.

However, these increases faced offsetting pressure by decreases in residential fixed investment and private inventory investment. Imports, which are a negative in the calculation of GDP, decreased. The personal consumption expenditures price index, a measure of inflation, increased 4.3% in the third quarter, lower than the 7.1% advance in the second quarter.

GDP Rises Alongside Stock Market Volatility

Overall, the stock market experienced a great deal of volatility in the penultimate week of 2022. However, investors keep their eyes on the latest inflation figures, which indicate that the Federal Reserve’s increases to the federal funds rate are reducing inflationary pressures.

Also worth noting, China experienced a surge in COVID-19 cases. This does indicate the possibility of another lockdown. Such an event would influence the global economy, potentially impacting the first-quarter GDP figures in 2023. However, after declines in the first two quarters of 2022, the third-quarter GDP report shows that the economy is once again beginning to accelerate heading into the new year.

To discuss your portfolio management strategy for 2023, contact the financial advisors at IHT Wealth Management.

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