US GDP slowed sharply in Q3 but big rebound expected in Q4

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The MSC Naomi container ship sails out from from the port of Charleston, S.C.,Thursday, Oct. 28, 2021. Hampered by rising COVID-19 cases and persistent supply shortages, the U.S. economy slowed sharply to a 2% annual growth rate in the July-September period, the weakest quarterly expansion since the recovery from the pandemic recession began last year. (AP Photo/Rebecca Blackwell)

WASHINGTON (AP) — The U.S. economy slowed to a modest annual rate of 2.1% in the October-December quarter, slightly better than first reported. But economists are predicting a solid rebound in the current quarter as long as rising inflation and a recent uptick in COVID cases do not derail activity.

The increase in the gross domestic product, the economy's total output of goods and services, was up from an initial estimate of 2% for the third quarter. But the revision was still well below the solid gains of 6.3% in the first quarter this year and 6.7% in the second quarter.

The weak summer performance reflected a big slowdown in consumer spending as a spike in COVID-19 cases from the delta variant caused consumers to grow more cautious and snarled supply chains made items such as new cars hard to get and also contributed to a burst of inflation to levels not seen in three decades.

While COVID cases in recent weeks have started to rise again in many parts of the country, economists do not think the latest increase will be enough to dampen consumer spending, which accounts for 70% of economic activity.

The expectation is that the economy in the current October-December quarter could grow at the strongest pace this year, possibly topping 8%.

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