United States economic outlook: third quarter of 2023

United States economic outlook: third quarter of 2023

Supported by retreating inflation and a strong job market, the U.S. economy grew at the fastest pace in nearly two years in the third quarter of 2023.

1. The United States Gross Domestic Product (GDP) rose 5.2% in the third quarter of 2023, the fastest quarterly pace since the fourth quarter of 2021. The third quarter of 2023 was the fifth consecutive quarter of growth above the economy’s potential, estimated at 2% (figure 1).

2. The labor market has continued to show strength. An average of 232,000 new jobs were created per month and 2.6 million new jobs were added from January to November 2023, while the unemployment rate was at 3.7% at the end of November (figure 2).

3. Inflation has continued to moderate. It slowed to 3.1% in November 2023 from 6.5% in December 2022. Core inflation, which excludes volatile energy and food categories, declined to 4% in November, the lowest level in two years, from 5.7% in December 2022 (figure 3).

4. On 13 December 2023, the Federal Reserve held interest rates steady for a third consecutive meeting (figure 4). Fed officials signaled inflation had improved more rapidly than anticipated, opening the door to rate cuts next year. Most Fed officials penciled in three interest rate cuts for 2024 in projections released after their two-day meeting. This was their final policy decision of 2023.

5. In early November, amid growing expectations the Federal Reserve’s hiking cycle is coming to an end, a rally in U.S. Treasuries pushed 10-year yields down to their lowest level in five weeks. In response, four sovereign and two corporate issuers from Latin America and the Caribbean came to the international bond market in the first two weeks of November, issuing close to US$ 8 billion of international bonds, a total that was almost 30% higher than the volume for the whole month of October. From January to mid-November 2023, LAC bond issuers placed US$ 84.2 billion in international bond markets. This total was 32% higher than the 2022 annual volume (figure 5).

For a complete and detailed analysis see the PDF attachment with the full document.

Link to the document: https://www.cepal.org/en/publications/68784-united-states-economic-outlook-third-quarter-2023