The Economy Was Supposed to Slow by Now. Instead It’s Revving Up

livemint.com:

Earlier this year, economists and Federal Reserve officials predicted that the U.S. economy would be sputtering by now as higher interest rates cut into spending and investment. The opposite is happening.

Recent economic data suggest the economy is accelerating despite higher borrowing costs, the resumption of student-loan payments, and wars in Ukraine and the Middle East. Analysts, many of whom had expected a recession this year, are pushing up their forecasts. Goldman Sachs economists last week raised their growth estimate for the third quarter ended on Sept.

30 to an annual rate of 4% from 3.7%. High Frequency Economics, an economic consulting firm, raised its third-quarter forecast to 4.6% from 4.4% and its fourth-quarter forecast to 1.2% from 1%. A figure in that forecast range for the third quarter would represent acceleration from 2.2% growth in the first quarter and 2.1% in the second.

The Commerce Department reports the official figure on Thursday. A banner September By some measures, the labor market actually got stronger over the course of the third quarter. Employers added 336,000 jobs in September, up sharply from 227,000 in August and 236,000 in July.

That hiring is fueling new spending. Monthly retail and food-service sales were up 0.7% in September after 0.8% in August, 0.6% in July and 0.2% in June. Manufacturing, which had sagged in the spring, is showing signs of rebounding as well.

Factory output ticked up 0.4% in September, Fed data showed Tuesday, after declining 0.1% in August. Big banks such as Citigroup and JPMorgan Chase reported strong earnings this month, and executives say their outlook on the economy has improved. American Airlines also said Thursday that it expects travel demand this