Business and economy news to reduce consumer spending

A wave of Covid-19 lawsuits, rising inflation and a reduction in the federal financial lifeline slowed the U.S. economic recovery in Q3.

The U.S. economy grew at a slower pace in the three months ended September, as COVID-19 lawsuits, supply chain disruptions, rising inflation and a reduction in the federal financial lifeline slowed the country’s economic recovery.

The U.S. Gross Domestic Product (GDP), which measures the value of goods and services produced by the economy, rose 2 percent in the third quarter from the same period a year ago, the U.S. Bureau of Economic Analysis said Thursday.

Those initial readings marked a sharp recession from the second quarter when inflation-adjusted GDP grew 6.7 percent. The number of headlines in the third quarter has also fallen short of expectations by many analysts.

“The resurgence of the COVID-19 case has resulted in new restrictions and delays in reopening installations in some parts of the country,” the BEA said in its press release on Thursday. “The amount of government-forgiven loans to businesses, grants to state and local governments, and government assistance in the form of social benefits for families has decreased.”

There was a sharp slowdown in consumer spending behind the disappointing growth figures. Personal spending grew 1.6 percent year-over-year in the third quarter, compared to 12 percent in the second quarter.

Countless factors are taking the wind out of the sails of U.S. consumers, whose spending is responsible for about two-thirds of the country’s economic growth.

A wave of COVID-19 transmission, driven by the highly contagious Delta variant, spread to different parts of the country in the three months ending in September. The glue supply chain and the ongoing shortage of raw materials have pushed up prices for the business, many of which have reached consumers. And as prices rose, many consumers had less money to spend, thanks to a reduction in government stimulus.

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