WASHINGTON, Sept 28 - The U.S. economy maintained a fairly solid pace of growth in the second quarter and activity appears to have gathered speed this quarter, but a looming government shutdown and an ongoing strike by auto workers are dimming the outlook for the rest of 2023.
"The labor market is rock solid with low jobless claims and no rebalancing in economic demand to be seen," said Christopher Rupkey, chief economist at FWDBONDS in New York."The Fed hasn't nailed inflation yet and this increases the risks of another rate hike this year." The economic picture was little changed from 2017 to 2022, with GDP growing at an average annual rate of 2.2%, up from the previously estimated 2.1% pace. Since March 2022, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25%-5.50% range.
Hundreds of thousands of federal workers will be furloughed and a wide range of services, from financial oversight to medical research, will be suspended if Congress does not provide funding for the new fiscal year that starts on Oct. 1.