U.S. economy’s Q3 GDP growth up 4.9%, beats expectations

The United States’ gross domestic product (GDP) growth in the third quarter surprised the market by beating estimates by a wide margin. The U.S. Department of Commerce announced on Thursday local time that the country’s third-quarter GDP grew at 4.9 percent annually, which is as much as 0.4 percentage points higher than the Bloomberg consensus of 4.5 percent and 2.8 percentage points higher than the second quarter GDP growth of 2.1 percent. It is the strongest growth since the fourth quarter of 2021, when the economy expanded 7 percent due to base effects following the Covid-19 pandemic.

The surprise GDP growth in the third quarter came as consumers opened their wallets much more than expected during the summer vacation season. Unlike in South Korea, the United States bases its GDP statistics on annualized growth from the previous quarter. Even as fears of prolonged high interest rates linger, personal consumption grew 4 percent, up sharply from 0.8 percent in the second quarter. Private investment also helped boost growth in the third quarter with an 8.4 percent increase.

Meanwhile, Korea’s third-quarter GDP growth was 0.6 percent compared with the previous quarter, driven by semiconductor exports and a recovery in consumption, outperforming market expectations of 0.4-0.5 percent. Exports bottomed out and private consumption, which had been a drag on the economy, recovered, posting positive growth for the third consecutive quarter. The government expressed confidence in its 1.4 percent annual growth target, projecting the economy to continue the “start weak and end strong” trend in 2023.

Earlier on Thursday, the Kospi suffered its biggest drop of the year, falling below the 2,300 level for the first time in 10 months. The decline came following the rise in the U.S. GDP, a rise in U.S. 10-year Treasury rates, and earning shocks from big tech companies.

The Kospi closed at 2299.08, down 64.09 points, or 2.71 percent, from the previous day, the first time since January 6 that the Kospi fell below 2300. The secondary Kosdaq also plunged 26.99 points, or 3.5 percent, to 743.85. The Korean won value also fell 10.3 won against the dollar, closing at 1360 won per dollar.

However, the Dow Jones, S&P 500, and Nasdaq indices had mixed reactions on the New York Stock Exchange after the GDP release.