October 26, 2023
Dear Taylor, Beyonce, Barbie and Messi thank you so much…
Oh – don’t mind me. I’m just writing a little thank you to a few of the reasons why the US economy more than doubled in growth in the third quarter.
I’m going to tell you more about that in a second – but first let me tell you about the blockbuster numbers.
The Gross Domestic Product report was just released and it found 4.9% growth in Q3 of 2023 (from July – September). That’s up from 2.1% growth in the second quarter of this year (from April – June.) That’s five straight quarters of GDP gains.
In case you are wondering – Gross Domestic Product – or GDP is the measurement of the market value of all the final goods and services produced in a specific time period by a country. The GDP is one of the key factors that measures the health and strength of an economy. When you add this report to our super solid jobs market – the fact is the US economy is really strong right now.
But you might be thinking — with the highest interest rates in 15 years, high inflation and overall feelings of stress by consumers – how could this be true? How could the economy be so strong.
Well first you have to remember we’re talking about the third quarter – that is July through September. It wasn’t the only contributor – but the report found the number one reason for this recent GDP growth was consumer spending. And I’m not just talking about spending on necessities – I’m talking about spending on luxuries like dining out, travel and yes experiences. And we were doing it a lot.
Enter Taylor Swift, Beyonce, Barbie and superstar Lionel Messi.
Remember when Americans were shelling out billions of dollars to see Taylor’s Eras tour and Beyonce’s Renaissance tour? Those tickets were hundreds of dollars each and they were selling out. And people weren’t just spending on tickets, they were spending on buying new outfits, hotel stays and restaurants. Not to mention the highest grossing movie of the year – Barbie which opened in July and has raked in more than $600 million in ticket sales just in the United States. Then there was Lionel Messi the global soccer superstar who started to play for Inter Miami’s team in July. And ever since — fans packed not only Miami’s stadium but also the stadiums of the away teams were Messi is playing. And those tickets are also hundreds of dollars.
But travel also picked up in the third quarter – the Federal Reserve says a record 33% of American households took a vacation this summer. And the TSA recorded 273 million people passed through one of their airport checkpoints from June to mid-September. All of that contributes to the GDP.
Now – it’s not all rainbows and puppy dogs – there are some things in the report that could be warning signs for the future. The report found Americans saved less of their incomes in the 3rd quarter which is a sign that maybe they will start to slow spending in the coming quarters. Business investments also stalled and there are fears that the extended high interest rates and wars in Ukraine and the Middle East if they drag on — could really put a strain on the economy in the coming quarters.
Read the Fed report on travel here.
