Fresh U.S. economic data has put new pressure on Federal Reserve Chair Waller’s recent view that the economy is not overheating. Markets are still betting on a December rate hike, while the central bank faces a tougher policy trade-off between sustaining growth and containing prices. According to data released by the U.S. Commerce Department, third-quarter real gross domestic product grew at a 3.4% annualized quarter-over-quarter rate, above market expectations. Over the same period, consumer spending rose 3.8% and business equipment investment jumped 20.9%.
The figures arrived one day after Waller said he did not believe the U.S. economy was running too hot and that he did not want overly tight monetary policy to obstruct the expansion. The latest numbers point to continued strength in economic activity even as markets expect the Federal Reserve to keep raising rates. That leaves policymakers with a more complicated decision as inflation continues to broaden.
Fresh U.S. economic data is challenging Federal Reserve Chair Waller’s view that the economy is not overheating, while markets continue to price in a December rate hike and the Fed faces a more difficult policy choice.
Data released by the U.S. Commerce Department showed that real gross domestic product in the third quarter grew at a 3.4% annualized quarter-over-quarter rate, beating market expectations. In the same period, consumer spending increased 3.8%, while business equipment investment rose 20.9%. Strong consumer demand and corporate investment pushed growth above expectations, even as inflation continued to spread.
One day before the data was released, Waller said he did not think the U.S. economy was running too hot and that he did not want excessively tight monetary policy to hinder the expansion.
The latest figures, however, suggest that U.S. economic activity has yet to show a clear slowdown even as markets expect the Federal Reserve to continue raising rates. That leaves the central bank balancing growth and price control under more complicated conditions.
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