The U.S. economy grew at an annual rate of 2 percent in the third quarter, the U.S. Commerce Department reports.
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"The increase in third quarter GDP reflected the continued economic impact of the COVID-19 pandemic," the department's Bureau of Economic Analysis said in an advance estimate.
"A resurgence of COVID-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country," the bureau noted. "Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased."
Aside from surging COVID-19 cases and waning government support, the U.S. economy is seeing continued supply chain disruptions, which have pushed up inflation and could dampen the economic outlook going forward.
The increase in real GDP in the third quarter reflected increases in private inventory investment, personal consumption expenditures (PCE), state and local government spending, and nonresidential fixed investment, said the report.
The deceleration in real GDP in the third quarter was partially driven by a slowdown in PCE, which grew at 1.6 percent after a 1 percent jump in the prior quarter, the report showed.
From the second to third quarter, spending for goods was down, led by motor vehicles and parts, and services decelerated, led by food services and accommodations, according to the report.
The latest GDP data came about a week after the Federal Reserve released its latest Beige Book, which showed that U.S. economic growth slowed from mid-August through September, constrained by supply chain disruptions, labor shortages, and uncertainty around the Delta variant.
The Fed survey noted that most districts reported "significantly elevated prices," fueled by rising demand for goods and raw materials. "Reports of input cost increases were widespread across industry sectors, driven by product scarcity resulting from supply chain bottlenecks," it said.
The Labor Department recently reported that U.S. inflation remained elevated in September as supply chain disruptions had persisted for months, with the consumer price index rising 5.4 percent over the 12 months ending September.
U.S. Treasury Secretary Janet Yellen said on Sunday that on a 12 month basis, inflation will remain high into next year because of recent events, but she expected inflation to fall to acceptable levels in the second half of next year. ■