The U.S. economy accelerated to a brisk 5.2% annual pace from July to September, surpassing the previous estimate of 4.9%.

Despite this boost, economists are cautioning that the current quarter may witness a sharp slowdown due to the cumulative impact of heightened borrowing rates on consumer and business spending.

Healthy Growth

Revised figures for Q3 disclosed the fastest quarterly expansion in almost two years, with consumer spending rising at a healthy 3.6% annual rate, albeit slightly lower than the initial 4% estimate.

Private investment, particularly in housing, defied higher mortgage rates, at a 10.5% annual pace.

Companies building inventories contributed 1.4 percentage points to quarterly growth, indicating a broad-based economic acceleration.

Increased Government Spending

Government spending at various levels played perhaps the biggest role, contributing to the overall positive economic picture.

In fact, the increase in govenrment spending has increased 5.5% for July-through-September, marking a greater increase than economic growth.

This resilience is noteworthy considering the Federal Reserve's 11 interest rate hikes since March 2022 aimed at combating inflation.

While higher rates have increased borrowing costs, they've also alleviated inflationary pressures, with consumer prices rising 3.2% last month, a marked improvement from the 9.1% year-over-year inflation in June 2022.

Despite a cooling job market, which remains healthy by historical standards, with an average monthly addition of 239,000 jobs in 2023, the unemployment rate has consistently stayed below 4% for a record 21 months. Hopes for a 'soft landing,' where the Fed curbs inflation without triggering a recession, are still alive.

The Organisation for Economic Cooperation and Development forecasts a reduced U.S. growth of 1.5% in 2024, down from 2.4% in 2023, as the Fed's series of interest rate increases continue to restrain economic expansion.

Recovering Crypto Market

The crypto market on the other hand, has been steadily recovering.

According to Statista, December 2022 recorded a low of about 800 billion USD in market capitalisation across all cryptocurrencies.

November 15 registered an almost 60% increase, marking approximately 1.4 trillion USD in market capitalisation.