Growth Stalled Sharply in the Third Quarter
US economic growth went from a heroic sprint to a wheezing stumble over the summer, slowing rapidly as supply-chain bottlenecks and a resurgent pandemic dragged on retail, manufacturing, and hospitality.
The US gross domestic product grew only 0.5% in the third quarter — down from 1.6% in the second — the Commerce Department announced Thursday, dealing a huge blow to the hopes of almost every human being on earth wishing the recovery would finally jump the COVID-19 hurdle.
Businesses’ Delta Blow
Consumer spending growth, the core driver of the recovery so far, slowed to a glacial 0.4%, down from 2.9% just three months earlier. Causes of the relapse include the Delta variant — which led many Americans to push back travel, spending, and socializing — and a clogged supply chain that many economists dismissed as a blip … but is likely to drag into 2022.
It isn’t all doom and gloom. Some firms have found room to bloom — but with caveats:
- Anheuser-Busch InBev, the world’s largest brewer, posted a surprise 6.1% increase in third-quarter profits to $1.7 billion Thursday, and said sales increased 3.4% — thanks to a Brazilian beer blast. But it’s still off pre-pandemic sales levels in most countries by 20%.
- Construction equipment giant Caterpillar also topped expectations with a $1.4 billion quarter, more than double last year’s haul. Still, it could grow hungry meeting orders due to a crawling supply chain.
- McDonalds also topped expectations by pulling in $6.2 billion in revenue, but that’s mostly because it jacked up prices 6% in the last year to offset rising costs — not because everyone is suddenly having a Big Mac attack.
Was-sup With Supply: Supply issues are causing two problems: 1) Delaying deliveries, which puts companies like Caterpillar in a bind, and 2) Leading to higher prices, which tests the mettle of companies like McDonald’s that need to figure out exactly how much customers are willing to pay to get fries with that.