Consumer spending skyrocketed in retail, recreational goods, vehicles, housing and prescription meds

The US Gross Domestic Product (GDP) grew like Jack’s Enchanted Beanstalk last quarter and jumped 4.9%, growing at the fastest pace in nearly two years last quarter. The surge beat analysts’ expectations and was fueled by increased consumer spending.

In the second quarter, real GDP increased 2.1%, according to the Commerce Department data released yesterday.

Consumer spending skyrocketed in the quarter ending in September—which was up 4%—in areas like retail, recreational goods, food services, vehicles, housing and prescription meds. 

Several economists attribute the consumer spending spree to pandemic-era savings and stimulus checks.

On a side note, Taylor Swift and Beyonce concerts and the Barbenhimer phenomenon have added to the Q3 GDP growth.

Baffled
Financial analysts, including Federal Reserve Chair Jerome Powell, are baffled at the GDP growth despite lingering fears of a recession.

The sharp increase happened despite the Fed Chair hiking up borrowing rates continuously. However, the same trend may not persist in the fourth quarter as student loan repayments resume and further rate hikes. The Middle East crisis also adds to the uncertainty.