US economic growth rebounded strongly in the third quarter amid a shrinking trade deficit, but that overstates the economy’s health as domestic demand was the weakest in two years because of the Federal Reserve’s aggressive interest rate hikes.The Commerce Department’s advance third-quarter gross domestic product report on Thursday also showed residential investment contracting for a sixth straight quarter as the housing market buckles under the weight of surging mortgage rates. While overall inflation slowed substantially from the second quarter, price pressures continued to bubble.Still, the rebound in growth after two straight quarterly declines in gross domestic product (GDP) was further evidence that the economy was not in a recession, though the risks of a downturn have increased as the Fed doubles down on rate hikes to battle the fastest-rising inflation in 40 years.
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