US economy shows Q3 growth rebound amid interest rate risks

The US economy is showing signs of a rebound in the third quarter, with median nowcasts projecting an annualized GDP growth rate of 2.8%. This represents a significant increase compared to the 1.5% growth recorded in the second quarter. Recent indicators, such as a 1.2% rise in retail sales during August and the Dallas Fed’s Weekly Economic Index, suggest strengthening economic activity.

However, the outlook for the remainder of the year remains uncertain due to rising interest rates and inflation concerns. The Federal Reserve recently implemented its first interest rate hike in three years to combat price increases. Economists warn of a potential squeeze on the economy caused by a slowdown in consumer spending—driven by inflation and geopolitical uncertainty—coupled with the Federal Reserve's efforts to cool the economy through higher rates. These factors could lead to higher unemployment and tighter financial market conditions.