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U.S. Posts Weakest Growth of Pandemic Recovery on Supply Woes -Breaking


© Reuters. U.S. Posts Experience the Lowest Growth of Pandemic Recovery on Supplies Woes

( — U.S. growth slows more than anticipated in third quarter. It is the weakest rate of recovery since the Pandemic. The slowing pace was caused by a snarling supply chain, and a rise in Covid-19. Investment and spending were halted.

Gross domestic product expanded at a 2% annualized rate following a 6.7% pace in the second quarter, the Commerce Department’s preliminary estimate showed Thursday. 

The deceleration reflected a sharp slowdown in personal consumption, which  grew at just a 1.6% pace after a rapid 12% jump in the prior period. Both goods and services spending were affected by transportation bottlenecks and rising prices.

According to a Bloomberg Survey of Economists, the median estimate for GDP growth was 2.6%. 

Recent data shows how supply shortages are limiting the U.S. economy. Producers are struggling to keep pace with the demand because they have fewer workers and lack necessary materials. Delta variant took another hit for service providers. 

Supply chain issues are likely to continue well into 2022. But, subventions for Covid-19 infections as well as higher savings will support household spending over the remaining three months. 

Consistent supply limitations, combined with other reopening effect have caused prices to rise for various products. This has raised concerns about the extent and timeframe of recent inflation. 

Federal Reserve officials closely monitor the personal consumption expenditures price Index, which excludes food and energy, but it remained elevated in last quarter. 

“We don’t see the raw material or the inflation environment slowing down in any way.” — 3M Co. CFO Monish Patolawala, Oct. 26 earnings call

“Consistent with the broader market, we are experiencing inflation pressure… Next year we anticipate a more challenging inflation environment.” — General Electric (NYSE:) Co.  CFO Carolina Dybeck Happe, Oct. 26 earnings call

“I think the headwinds and the increased distribution costs will certainly be with us into 2022.” — Kimberly-Clark Corp (NYSE:). Maria Henry (CFO), Oct. 25 earnings conference

“On the cost side of the equation… we do not see any meaningful improvement until well into 2022.” — Sherwin-Williams Co (NYSE:). October 26th earnings call by CEO John Morikis

“The risks are clearly now to longer and more persistent bottlenecks and thus to higher inflation,” Fed Chair Jerome Powell said last week. “We now see higher inflation and the bottlenecks lasting well into next year.


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