BlackRock Investment Institute

Macro insights

U.S. restart slowing but not over

The U.S. economy grew by an annualized 2% in the third quarter – slower than the 6.7% expansion in Q2 and somewhat below expectations. We still see some room to run even as the pace of the restart is slowing. The softening in growth was mainly due to a fall in consumer spending on goods. This was expected given the end of stimulus checks, which had previously boosted goods consumption. Concerns about the Delta variant also contributed to the slowdown.

Services spending still catching up

Chart showing U.S. GDP still below a projection of the pre-pandemic trend

Sources: BlackRock Investment Institute, U.S. Bureau of Economic Analysis, with data from Refinitiv Datastream, October 2021. Note: The orange line shows the level of U.S. real GDP in U.S. dollars at a seasonally adjusted annualized rate. The yellow line shows a projection of what U.S. GDP would have been had it grown steadily from Q4 2019 at the average growth rate over the period 2013-19.

In contrast, spending on services continued to grow. Goods spending is above its pre-Covid trend, but services spending still remains far short. Non-residential fixed investment –i.e. company spending on physical assets like buildings, machinery and technology –is also far below pre-Covid levels and could provide a further boost to growth if it picks up again as uncertainty eases.

Overall, U.S. GDP has already surpassed its pre-Covid level but is yet to catch up with pre-Covid trend growth. See the chart. The restart is real –but not yet over.

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Elga Bartsch
Head of Macro Research
Read bio
Nicholas Fawcett
Macro Research

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