What is the real secret behind the resilience of the U.S. economy?

However, the tools at the disposal of the Federal Reserve (the United States central bank) do not give it full control over the economy’s trajectory; raising interest rates helps calm demand and inflation, but it increases financing costs for households and businesses, while cutting rates may encourage spending and investment, yet carries risks if it reactivates price pressures before containing them.

The latest growth data also support this assessment; preliminary estimates from the Economic Analysis Office, released on October 29, showed real GDP growth of 3.4% annualized in the third quarter, compared with 2.2% in the second quarter, driven by increases in investment and consumer and government spending.

Real final sales by private domestic purchasers, which combine consumer spending and fixed private investment, rose 4.9% annualized, versus 4.6% in the second quarter. This indicator reflects the strength of private domestic demand, independent of inventory changes, government spending, and net trade.

In the most recent productivity data available up to the preparation of this report, a review by the Labor Statistics Office published on September 3 showed non‑farm business productivity rising 1.4% annualized in the second quarter, a 2.2% increase versus the same period last year. Productivity measures output per hour worked.

The quarterly picture does not erase month‑to‑month performance variations; September/September data released on October 29 showed personal consumption expenditures rising 0.5% in current dollars, and less than 0.1% after adjusting for price changes, compared with real growth of 0.5% in August, according to updated data.

Energy remained a major source of pressure; its index rose 5.2% over the month, and gasoline prices climbed 9.1%, contributing more than half of the monthly increase in the overall index. The consumer price index excluding food and energy rose 2.6% on an annual basis. September/September remains the most recent reading published for this index as of the preparation of this report.