As products were left at busy ports while employers tried to hire workers, the U.S.’s economic recovery slowdown was evident.

According to Dow Jones estimates, the Commerce Department’s first estimate for third quarter annualized gross domestic products growth will be released Thursday. It is likely that it will only show a 2.8% increase.

This number may have looked great in pre-Covid days, but it would actually be the slowest since April 2020 when the recovery started. shortest but steepest recessionIn U.S. History.

Moreover, there’s a chance that the economy didn’t grow at all in the quarter – the Atlanta Fed’s GDPNowtracker reduced its estimate by 0.2%. This was due to the latest downgrade of government spending expectations and net exports.

However, economists are not worried. Economists agree that this slowdown was caused by factors that are primarily related to supply chain bottlenecks. These will decrease in the coming months and allow for recovery to continue.

Joseph LaVorgna is chief economist of the Americas for Natixis. He said, “The weakness in our economy is more due to supply distortions than anything else.” “The economy is fundamentally strong. I don’t think this would be a quarter of what we are going to look like.”

Natixis actually has a more positive outlook regarding the number of GDP. This is the sum of all goods and services produced by an economy. According to the firm, growth will be 3.3% in 2019, a sharp decline from 6.7% in the previous quarter. This is also the lowest rate since the shocking 31.2% drop in Q2 2020 due to pandemic.

LaVorgna explained that, “To the extent, we haven’t completely reopened, at minimum in terms of leisure and travel activities, things seem healthier than they actually are.” I don’t see this as an indication of what is to come.

CNBC Rapid UpdateSurvey of forecasters shows that median growth expectations for the third quarter are 2.3%

Despite these challenges, the economy is still strong.

There are dozens of ships are stuck at jammed California coast portsA recent estimate by Goldman Sachs shows that there is $24 billion worth of goods still un delivered. This is due to a large demand for services and goods at a moment when many companies struggle to fill vacant positions. B record 4.3 million workers left their jobs in AugustThe Labor Department reports that the economy has 10.4 millions job opportunities.

It is unlikely that supply chain problems will be solved soon, but there are some hints. Recent Dallas Federal Reserve surveyIt was revealed that 41.3% believe it will take at most 10 months before supply chains return to normal. Additionally, 64.5% Texas companies said they had experienced delays or disruptions in their supplies. That’s up from the 35.5% reported in February.

These issues are triggering an inflation run. near its highest point in 30 yearsProducts become less plentiful and materials costs continue to rise.

LaVorgna stated that he is concerned about rising energy prices, which could hinder growth.

He said that production is about 15% to 20% lower than it was before the pandemic. It is clear that higher energy prices are the only way to go. This is what will cause the economy to suffer more than supply chain problems.

In the meantime, we have reassessed our expectations of growth.

Goldman Sachs decreased its GDP outlook multiple times and lowered it further Wednesday to 2.75 percent for the third quarter. From its previously-slashed estimates of 5.7%, 4.4% and 5.6%, Goldman Sachs has reduced its full-year 2021 and 2022 outlooks to 5.6%, 4% and respectively.

Federal Reserve policymakers must deal with concurrent forces like slowing economic growth and increasing inflation. comparisons to the stagflationin the 1980s and 1990s. Traders are betting on when the Fed raises interest rates. The fed funds futures marketplace now expects the Fed to hike the rate in June 2022. There will be at least one additional increase before the year’s end.

Most economists, however, dismiss the possibility of stagflation and instead expect a normal set of circumstances.

This would result in a significant acceleration of GDP for the fourth quarter, followed by an economy that begins to look like the U.S. pre-pandemic. For instance, Jefferies economists see the third quarter recording a growth rate of 3.8% before accelerating to 8% by 2021.

Citigroup expects 3.4% growth in the third quarter, however economist Veronica Clark stated that this is more due to supply-side restrictions than softer demand.