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Australian Prime Minister Anthony Albanese has invited Chinese President Xi Jinping to Canberra after what he called a “positive” landmark summit in Beijing.

Albanese is the first Australian prime minister to visit mainland China since 2016, following years of friction. The Canberra government says his trip to China is an important step in the stabilization of diplomatic relations after various political and trade disputes.

Amid disagreements over various geopolitical issues, including human rights and the origins of COVID-19, Beijing imposed bans and tariffs on a range of Australian imports.

Albanese has sought a less-confrontational approach to China after an election win in May 2022, with the aim of stabilizing relations with Australia’s main trading partner while acknowledging areas of disagreement.

Albanese said his meeting Monday with Chinese President Xi Jinping was “one of goodwill.” He said he raised the case of the Australian writer and democracy activist Yang Hengjun, who has been detained by China for almost five years.

Australian government officials are hopeful that the last remaining Chinese restrictions on the country’s export commodities, including seafood and beef, will be scrapped by the end of the year. China has also said it would undertake a five-month review of duties it imposed on Australian wine.

Albanese told reporters in Beijing that his talks with the Chinese leader were broad.

“I did discuss international issues with President Xi and the importance of stability in the region and open channels of communication,” he said. “We also discussed our bilateral relationship. I raised consular and human rights issues during the meeting as well.”

But opposition Liberal Party Senator Simon Birmingham told the Australian Broadcasting Corp. Tuesday that the Canberra government must remain vigilant about China’s ambitions.

“We have seen Australia’s and other international security chiefs provide new warnings about the extent of Chinese cyber espionage,” he said. “We have seen the Chinese navy undertake aggressive action against the Philippines in the South China Sea. Whilst this visit might be positive, the Albanese government [must] not get any rose-colored glasses about the challenges that are there as well.”

China accounts for about a third of Australia’s global trade. Analysts say that China is highly dependent on Australian raw materials, including iron ore and liquefied natural gas, to help build its economy.

Albanese has invited Xi to visit Australia in the near future, while the Chinese president also asked the Australian prime minister to return to China and visit other parts of his country.
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On Friday, U.S. President Joe Biden hosted leaders from Latin America, the Caribbean, and Canada at the inaugural Americas Partnership for Economic Prosperity Leaders’ Summit, which aimed to enhance economic ties, fortify U.S. investments in the region, and tackle immigration challenges. Veronica Villafane narrates this report by Paula Diaz.
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The cancellation of two large offshore wind projects in New Jersey is the latest in a series of setbacks for the nascent U.S. offshore wind industry, jeopardizing the Biden administration’s goals of powering 10 million homes from towering ocean-based turbines by 2030 and establishing a carbon-free electric grid five years later.

The Danish wind energy developer Ørsted said this week it’s scrapping its Ocean Wind I and II projects off southern New Jersey due to problems with supply chains, higher interest rates and a failure to obtain the amount of tax credits the company wanted.

Together, the projects were supposed to deliver over 2.2 gigawatts of power.

The news comes after developers in New England canceled power contracts for three projects that would have provided another 3.2 gigawatts of wind power to Massachusetts and Connecticut. They said their projects were no longer financially feasible.

In total, the cancellations equate to nearly one-fifth of President Joe Biden’s goal of 30 gigawatts of offshore wind power by 2030.

Despite the setbacks, offshore wind continues to move forward, the White House said, citing recent investments by New York state and approval by the Interior Department of the nation’s largest planned offshore wind farm in Virginia. Interior’s Bureau of Ocean Energy Management also announced new offshore wind lease areas in the Gulf of Mexico.

“While macroeconomic headwinds are creating challenges for some projects, momentum remains on the side of an expanding U.S. offshore wind industry — creating good-paying union jobs in manufacturing, shipbuilding and construction,” while strengthening the power grid and providing new clean energy resources for American families and businesses, the White House said in a statement Thursday.

Industry experts now say that while the U.S. likely won’t hit 30 gigawatts by 2030, a significant amount of offshore wind power is still attainable by then, roughly 20 to 22 gigawatts or more. That’s far more than the nation has today, with just two small demonstration projects that provide a small fraction of a single gigawatt of power.

Large, ocean-based wind farms are the linchpin of government plans to shift to renewable energy, particularly in populous East Coast states with limited land for wind turbines or solar arrays. Eight East Coast states have offshore wind mandates set by legislation or executive actions that commit them to adding a combined capacity of more than 45 gigawatts, according to ClearView Energy Partners, a Washington-based research firm.

“I think very few people would argue that the U.S. will have the gigawatts the Biden administration wants” by 2030, said Timothy Fox, a ClearView vice president. “But I do think eventually we will have it and will likely exceed it.”

Offshore wind developers have publicly lamented the global economic gales they’re facing. Molly Morris, president of U.S. offshore wind for the Norwegian company Equinor, said the industry is facing a “perfect storm.”

High inflation, supply chain disruptions and the rising cost of capital and building materials are making projects more expensive while developers are trying to get the first large U.S. offshore wind farms opened. Ørsted is writing off $4 billion, due largely to cancellation of the two New Jersey projects.

David Hardy, group executive vice president and CEO Americas at Ørsted, said it’s crucial to lower the levelized cost of offshore wind in the United States so Americans aren’t debating between affordability and clean energy. Hardy spoke at the American Clean Power industry group’s offshore wind conference in Boston last month on a panel with Morris.

“We’re probably a little bit too ambitious,” he said. “We came in hot; we came in fast, we thought we could build projects that were inexpensive, large projects right out of the gate. And it turns out that we probably still need to go through the same learning curve that Europe did, with higher prices in the beginning and a little slower pace.”

In May, there were 27 U.S. offshore wind projects that had negotiated agreements with states to provide power before the brunt of the cost increases hit, according to Walt Musial, offshore wind chief engineer at the National Renewable Energy Laboratory, an arm of the Energy Department. The delay between signing purchase agreements and getting final approval to build allowed unexpected cost increases to render many projects economically unfeasible, he said.

Musial called Ørsted’s announcement a setback for the industry but “not a fatal blow by any means.”

On Tuesday, the Biden administration announced approval of the nation’s largest offshore wind project. The Coastal Virginia Offshore Wind project will be a 2.6 gigawatt wind farm off Virginia Beach to power 900,000 homes. And even as Ørsted announced the New Jersey cancellations, it said it was investing with utility Eversource to move forward with construction of Revolution Wind, Rhode Island and Connecticut’s first utility-scale offshore wind farm, a 704-megawatt project.

The current outlook from S&P Global Commodity Insights is 22 gigawatts by 2030, though that will be revised due to the recent industry announcements.

New York state, meanwhile, recently announced the award of 4 gigawatts of offshore wind capacity as it seeks to obtain 70% of its electricity from renewable sources by 2030 and 9 gigawatts of offshore wind by 2035. That announcement came shortly after New York regulators rejected a request for bigger payments for four offshore wind projects worth a combined 4.2 gigawatts of power.

Any delay in offshore wind means continued reliance on fossil fuel-burning power plants, according to environmental advocates. “The quicker they come online, the quicker our air quality improves,” said Conor Bambrick, director of policy for Environmental Advocates NY.

New Jersey, under Democratic Gov. Phil Murphy, has established increasingly stringent clean energy goals, moving from 100% clean energy by 2050 to 100% by 2035. Murphy cast Ørsted’s decision as “outrageous” and an abandonment of its commitments, but the two-term Democrat said New Jersey plans to move forward with offshore wind.

The first U.S. commercial-scale offshore wind farms are currently under construction: Vineyard Wind off Massachusetts and South Fork Wind off Rhode Island and New York. 
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This week, the U.S. State Department confirmed that Washington’s plan to refurbish and extend the Lobito Corridor — a railway that will run through mineral-rich Zambia and the Democratic Republic of Congo to an Atlantic port in Angola — is moving full steam ahead.

Such ambitious infrastructure investments by other powers in Africa have been derailed in the past. For years, China has tried with mixed results to increase its influence in Africa and boost trade connectivity by investing in ports and railways.

Debt-incurring or unfinished projects undertaken as part of Beijing’s Belt and Road Initiative, or BRI, have been criticized, prompting what analysts see as a new focus on what Chinese President Xi Jinping has called a “small and beautiful” approach.

Now the West is stepping in, with the U.S., European Union, the three African nations and two financial institutions signing a memorandum of understanding last month to develop the partially existing Lobito Corridor.

Plans were outlined in an online media briefing this week, and a six-month feasibility study is expected to start before the end of the year, said Helaina Matza, the acting special coordinator for the Partnership on the Global Infrastructure Investment, or PGII. The intention is to get the 800 kilometers (500 miles) of new track built within five years at an estimated cost of more than $1 billion, she said.

When asked how the U.S. plans to sustain the project long-term and avoid the mistakes made by other foreign powers pursuing infrastructure projects on the continent, Matza was optimistic.

“It’s not all concessional financing going directly to governments,” she said, noting that a private partner, the Africa Finance Corp., is involved and will be putting “forward a plan for operation and maintenance and putting forward a plan around capacity development.”

While not mentioning China directly, she said: “I think we’ve learned from mistakes and projects that over the years, frankly, we’ve helped bail out because they needed refurbishment a little too quickly.”

Liu Pengyu, China’s Embassy spokesperson in Washington told VOA in an emailed response that there is “broad space for cooperation in the field of global infrastructure, and there is no question of various relevant initiatives contradicting or replacing each other.”

Liu also denied the frequent criticism that Beijing is using BRI and its projects to create spheres of influence.

“Any calculation to advance geopolitics in the name of infrastructure development is not welcome and doomed to fail,” he said.

Lessons from the BRI?

One of China’s largest BRI investments was the $4.7 billion Standard Gauge Railway in Kenya, which started operating in 2017 and connects the capital, Nairobi, with the port city of Mombasa.

The railway was supposed to connect to neighboring Uganda, as a way of bringing critical minerals to the coast, but it never got that far, leaving the cargo side of the business struggling. This week the Kenyan government announced a sharp increase in fares for passengers, citing rising fuel prices.

The announcement came on the heels of President William Ruto’s visit last month to China, where he was seeking a $1 billion loan to complete unfinished infrastructure projects. Some Kenyans have also criticized the project for not hiring enough locals to operate the railway.

Asked whether the existence of the BRI will help inform the new US/EU initiative, Yunnan Chen, a researcher at the global think tank Overseas Development Institute, said it has already had an impact.

“While the BRI can be criticized on many areas, one success it’s certainly had is to raise the profile of infrastructure in development, and crowded in greater interest — and welcome competition — in this space,” she said, noting the G7 now has the Partnership for Global Infrastructure and Investment and the E.U. has the Global Gateway. The first Global Gateway forum was held last month in Brussels, where the Lobito Corridor memorandum of understanding was signed.

“The fact that U.S. has taken such a deep interest in Angola — a major BRI partner and one of the largest recipients of infrastructure lending from China — is a clear sign they want to ramp up the competition directly in China’s spheres of interest,” she said.

While some of the Chinese projects have faced “legitimate criticism,” Chen said, railway projects can be difficult to make profitable based on passengers and freight if they are not linked to the mining sector.

“The Lobito Corridor may do better than some of the East African projects, since they will likely be directly connected to minerals/mining projects that justifies the freight, but it will be a test to see how the U.S. and EU will tackle the challenges that rail construction brings,” she said.

These challenges include social and environmental impacts and management of the railway once completed, all problems the Chinese have faced. Chen said it will be interesting to see how the West now fares “given the emphasis on higher standards.”

Matza, the acting PGII coordinator, said, “Our ethos for any sort of infrastructure we invest in is that the project is transparent.”

She said the U.S. wants to ensure that “the whole corridor is successful and that people who live along that corridor can participate not only in commerce but in other activities that really benefit the economic development of themselves and their countries.”

View from Africa

So who do ordinary Africans trust more when it comes to infrastructure investment, the U.S. or China?

VOA put that question to Johannesburg residents this week to see what they think.

Musician Luyolo Yiba, 29, was cynical as he sipped a drink at a sidewalk cafe.

“Both are looking at taking minerals, so it’s tricky to say this one is better than that one,” he said, adding that he doubts the U.S. is primarily concerned with helping the African people and that he expected the money to be lost to government corruption in Africa.

Zoyisile Donshe, an entrepreneur in his 40s, said he doesn’t think there needs to be competition for influence in Africa at all.

“They see that Africa is the future,” he said. “I love America, I love China as well. They’re creating opportunities in Africa. … I think most Africans would prefer them to cooperate.”

Asked whether the Lobito Corridor could end up being linked to any Chinese-built railways in the region, Matza said it was too soon to say but did not rule it out.

“There’s a lot of work happening, there’s maybe a Tazara refurbishment,” she said, referring to a railway linking Zambia and Tanzania. 

“There’s a lot of talks about an additional rail line that can continue south and maybe out through Mozambique,” she said. “We’re taking this on one piece at a time knowing what we can finance, support and help design.”
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U.S. President Joe Biden will host leaders from Latin America and the Caribbean at the White House on Friday to discuss economic issues and migration as he seeks to bolster ties in the region to counter China and other global competitors.

Leaders from Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Peru and Uruguay are expected to attend Friday’s gathering, as well as representatives from Mexico and Panama.

The inaugural Americas Partnership for Economic Prosperity, or APEP, Leaders’ Summit comes as Biden’s foreign policy agenda is dominated by the Israel-Hamas conflict in Gaza and Ukraine’s bid to repel Russian invaders.

The United States will announce new economic tools together with the Inter-American Development Bank and private donors to aid countries hosting migrants in the Western Hemisphere, with a goal of expanding economic cooperation and curbing migrant arrivals at the U.S-Mexico border, senior administration officials said.

“When the countries are working together on a common economic agenda … it has the potential to significantly shift the economic dynamics in a region that has been moving slower than its peers on the adoption of technology, on taking advantage of the nearshoring trends,” a senior administration official said.

Biden remained convinced that targeted economic investment in refugee and migrant host countries “is critical to stabilizing migration flows,” a second official said.

Six APEP countries — Costa Rica, Ecuador, Colombia, Peru, Chile and Panama — have offered legal status to millions of people displaced in the Western Hemisphere, the official said.

“They have stepped up in big ways, and we are stepping up for them. APEP is a big part of that,” the official said.

U.S. Treasury Secretary Janet Yellen hosted a breakfast meeting for the leaders at the Treasury on Friday, telling them that the U.S. would work closely with the IDB to support efforts to better integrate the region’s supply chains.

She said Treasury strongly supported efforts by Inter-American Development Bank President Ilan Goldfajn to reform its private sector arm, IDB Invest, and would work with the bank’s other shareholders to enable a “significant” capital increase for IDB Invest.

The IDB, the region’s largest development bank, will unveil a new financing platform to serve middle- and higher-income countries, potentially mobilizing billions of dollars for investment in renewable energy, officials said.

The effort was focused on bolstering the region’s ability to compete globally in the clean energy, semiconductor and medical supplies sectors, one of the officials said.

The summit follows a similarly themed meeting of Western Hemisphere leaders in Los Angeles last year, part of a broader push aimed at strengthening regional economic ties and reducing China’s influence in the region.

At the “Summit of the Americas,” the U.S. and 19 other countries signed a nonbinding declaration agreeing to a set of measures to confront the migration crisis.

Record numbers of migrants have crossed illegally through the U.S.-Mexico border in recent years, with hundreds of thousands of people heading north after traversing a perilous jungle region known as the Darien Gap between Colombia and Panama.
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U.S. President Joe Biden will tout his plan to deepen Western Hemisphere economic integration on Friday when he hosts leaders from 11 other nations at the White House for the nascent Americas Partnership for Economic Prosperity.

Analysts say the initiative, introduced last year, may not result in a substantial trade boost or pose a significant challenge to China’s economic dominance and ambitions, but it could address other hemispheric challenges, like irregular migration.

In marketing the initiative on Thursday, Biden emphasized what he sees as a pillar of his diplomatic approach: mutual benefit.

“Together, we’re expanding opportunities for working people in both our nations, I believe, including through our Americas Partnership for Economic Prosperity,” Biden said during a pre-summit meeting with Dominican Republic President Luis Abinader.

Treasury Secretary Janet Yellen said Thursday that this economic partnership could affect manufacturing in crucial sectors such as renewables, medical supplies and semiconductors.

She said this is an example of “friendshoring” — the move to diversify supply chains by working with close friends and allies.

Yellen said the economic partnership “offers our countries a key vehicle through which to deepen economic integration, increase the competitiveness of our region, drive private-sector investment and foster inclusive and sustainable development.”

Competition

The United States faces stiff competition. In recent years, China has significantly boosted investment in and economic relations with South America, making it that continent’s largest trading partner.

Because the U.S.-led initiative leans on private-sector investment, it can’t match China’s government-driven approach, said analyst Jason Marczak, senior director at the Atlantic Council’s Adrienne Arsht Latin America Center.

“I don’t expect the U.S. to be able to match China dollar for dollar,” he told VOA. “China is not a capitalist system, and so the ways in which Chinese financing goes in the region is state-owned enterprises. It’s government money, other sources, all of which are directed by the Chinese government.”

But the U.S. can leverage its leadership by choosing projects and investments wisely and investing “in those areas that are critical for the future economic growth of the people of the Americas, and in a way that hopefully ensures that it is the actual people who ultimately benefit from this investment,” Marczak said.

Like the administration’s still-developing Indo-Pacific Economic Framework, this initiative doesn’t include new market access commitments, said economic analyst Tori Smith of the American Action Forum.

“Market access negotiations could be less necessary in this context, given that the existing network of trade agreements have tariff barriers close to zero with most participants,” she wrote March 2 in an analysis of the partnership. She noted that the U.S. has existing free-trade agreements with eight of the 11 other countries.

The partnership “is unlikely to substantially increase trade flows between the United States and the participating countries because the forum focuses very little on trade policy,” she argued.

However, this still-evolving economic agreement could address other challenges in the hemisphere, Marczak said.

“Investing in the APEC member countries, providing sustainable financing — that is all tied to migration,” he said. “Because ultimately, a country that is sending migrants, there will be less migrants that will leave the country when the economy is even stronger.”

While APEP negotiations lag considerably behind those of the Indo-Pacific Economic Framework – even though the programs were announced at roughly the same time – the U.S. currently has an edge in this hemisphere, said Shannon O’Neil of the Council on Foreign Relations.

“The U.S. maintains an advantage in terms of more comprehensive ground rules, a longer history of investment, and more balanced and higher value-added trade,” she said.

Jorge Agobian contributed to this report. 
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Amid rising debts, authorities in China’s coastal province of Jiangsu are encouraging workers at state-owned enterprises to participate in “off-duty entrepreneurships” and take leave without pay to start their own businesses.

News of the new measure came ahead of China’s two-day Central Financial Work Conference, attended by President Xi Jinping, who pledged to set up a long-term mechanism to resolve debt risks tied to local authorities and signaled a willingness to expand central government borrowing.

China’s local government debt reached 92 trillion yuan ($12.58 trillion), equal to 76% of the country’s economic output in 2022, according to the Reuters news agency. That was up from 62.2% in 2019.

Participants in the meeting, which concluded Tuesday, included Li Qiang, Zhao Leji, Wang Huning, Cai Qi, Ding Xuexiang and Li Xi, members of the Central Committee of the Chinese Communist Party.

They also pledged to “optimize the debt structure of central and local governments” and provide more funds for innovation, high-tech manufacturing, green technology and small-to-medium size companies.

In 2022, the gross domestic product of Jiangsu province, neighboring Shanghai, amounted to approximately 12.29 trillion yuan, or $1.68 trillion, while it owed a debt of 2.069 trillion yuan, or $282.8 billion.

Amid the increasing local debt, the Jiangsu provincial government launched a program in early October to encourage 200,000 state-owned enterprise workers every year until 2025 to start their own businesses, especially those who would do so on leave without pay.

The program especially aims to support scientific researchers, including professional and technical personnel from universities, scientific research institutes and other state-owned enterprises, in starting businesses.

They are encouraged to apply the results of their scientific and technological research to other part-time or temporary jobs, collaborate on projects outside their regular jobs, and become entrepreneurs on a leave-without-pay basis from their institutions.

Jiangsu province will retain their employment relationships for three years and continue to pay for the entrepreneurs’ social insurance and occupational annuities at their original workplaces. They will also be promoted and receive salary increases at the normal pace.

Fang Tsung-yen is an assistant researcher at the Institute for National Defense and Security Research in Taipei. Fang said China cannot reverse the economic downturn in the short term, so the local governments have to reduce the financial burden in the hope of stimulating economic prosperity.

She said the local government cannot force people to quit their jobs, so it is seeking other ways to reduce its payroll.

“Keeping your jobs sounds nice, but it’s actually just because [the local government] can’t afford to pay you. So [it] will encourage you to start your own businesses in the hope of reducing its financial burden,” she said.

The news triggered heated discussions online. One netizen, whose online name is Techno, said on Zhihu, the Chinese equivalent of Quora, “[It] may cause a severe loss of state-owned assets.”

A netizen commented under the name of BigBrother, “There are more people eating public food than contributing to public food. They don’t have money to pay salaries.”

Some others suspect the program may become mandatory.

“They probably will have a quota for each enterprise,” someone commented under the name of Euphemia66.

Some think this is a way to lay off people and cut jobs.

“Now, they say, ‘We give you a chance to start your own businesses.’ In a few years, they will say, ‘Your enterprise has a quota of three entrepreneurs this year,’ ” a netizen commented under the name of Mulei, the Knight of Smoke.

“You think you would leave for three years, and during that time, you would take advantage of your background in politics to benefit your business, and you would be financially independent. When you are back to the state-owned enterprise, you can live an easy life in old age.

“But actually, three days after you leave your enterprise, they would eliminate your position. And three years later, the enterprise wouldn’t exist anymore.”

Jiangsu’s government is not the only one affected by the economic downturn. Multiple provinces, including Jiangxi and Fujian, have announced collective salary reductions for civil servants, according to Chinese news website Toutiao.

The central government restricted the ability of local governments in 12 heavily indebted regions to take on new debt and limited any new state-funded projects, according to Reuters, quoting three sources. The 12 regions have to get approval from the central government to launch specified projects.

Tan Yao-nan, chairman of the Hui-li International Policy Advisory Group in Taipei, told VOA that fiscal problems — and especially local debt — are the biggest challenges China currently faces. He said China needs more than just expanding domestic demand or imports and exports.

Chinese authorities on October 24 announced the issuance of 1 trillion yuan, or $137 billion, in government bonds, which will further expand the central government’s fiscal deficit to 4.88 trillion yuan, or $666.9 billion, this year.

Tan said that if the debt of all central and local public sectors is combined, it is nearly three times the size of China’s GDP, which makes the severity of China’s debt problem far greater than that of neighboring Japan.

“Who will hold these government bonds?” Tan asked. “It must be held by major state-owned financial institutions and even provincial governments, so it is actually just debt relief. It’s just a cycle, and it doesn’t solve the long-term problem.”

The meeting that ended on October 31 signaled Beijing is considering further measures to resolve several sources of financial risk, including local government debt. But it didn’t provide any specifics.

Some of China’s biggest banks have been offering local governments loans with long maturities and temporary interest relief to prevent a credit crunch since the second quarter.
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In mid-November, Washington trade representatives will be in San Francisco for APEC Economic Leaders’ Week. Trade experts say the U.S. has moved toward policies that could help Washington attract more APEC nations to invest in the U.S. manufacturing boom. VOA’s Jessica Stone reports.
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The Federal Reserve kept its key short-term interest rate unchanged Wednesday for a second straight time but left the door open to further rate hikes if inflation pressures should accelerate in the months ahead. 

In a statement after its latest meeting, the Fed said it would keep its benchmark rate at about 5.4%, its highest level in 22 years. Since launching the most aggressive series of rate hikes in four decades in March 2022 to fight inflation, the Fed has pulled back and has raised rates only once since May. 

The latest statement noted that recent tumult in the financial markets has sent longer-term interest rates up to near 16-year highs and contributed to higher borrowing rates across the economy. 

“Tighter financial and credit conditions for households and businesses,” it said, “are likely to weigh on economic activity.” 

That reference echoed recent comments by Fed officials that higher yields — or interest rates — on the 10-year Treasury note could impose a dampening impact on the economy, cool inflation, and substitute for an additional rate hike by the Fed. 

Speaking at a news conference, Chair Jerome Powell suggested that the surge in longer-term interest rates will slow the economy if those higher rates stay high for a prolonged period. But he cautioned that the Fed isn’t yet confident that its own benchmark rate is high enough to slow the economy over time. 

Long-term Treasury yields have soared since July, the last time the Fed raised rates, swelling the costs of auto loans, credit card borrowing, and many forms of business loans. Nationally, the average long-term fixed mortgage rate is nearing 8%, its highest level in 23 years.

Economists at Wall Street banks have estimated that sharp losses in the stock market and higher bond yields could have a depressive effect on the economy equal to the impact of three or four quarter-point rate hikes by the Fed. 

Those tighter credit conditions, though, have yet to cool the economy or slow hiring as much as the Fed had expected. Growth soared at a 4.9% annual pace in the July-September quarter, powered by robust consumer spending, and hiring in September was strong.

On Wednesday, the government said employers posted a sizable 9.6 million job openings last month, well below the peak of early last year but still sharply above pre-pandemic levels. 

Consumer inflation has dropped from a year-over-year peak of 9.1% in June 2022 to 3.7% last month. But recent data suggests that inflation remains persistently above the Fed’s 2% target. 

Powell and other Fed officials have responded to the surprising evidence of economic strength by saying the Fed will monitor incoming data for any hints that inflation will either further subside or remain chronically above its target level. In the meantime, most Fed watchers expect the central bank to keep rates unchanged in December as well. 

Market analysts say an array of factors have combined to force up long-term Treasury yields and couple with the Fed’s short-term rate hikes to make borrowing costlier for consumers and businesses. For one thing, the government is expected to sell potentially trillions of dollars more in bonds in the coming years to finance huge budget deficits even as the Fed is shrinking its holdings of bonds. As a result, higher Treasury rates may be needed to attract more buyers. 

And with the future path of rates murkier than usual, investors are demanding higher yields in return for the greater risk of holding longer-term bonds. 

What’s important for the Fed is that the yield on the 10-year Treasury has continued to zoom higher even without rate hikes by the central bank. That suggests that Treasury yields may stay high even if the Fed keeps its own benchmark rate on hold, helping keep a lid on economic growth and inflation. 

Other major central banks have also been dialing back their rates hikes with their inflation measures having appeared to improve. The European Central Bank kept its benchmark rate unchanged last week, and last month inflation in the 20 countries that use the euro fell to 2.9%, its lowest level in more than two years. 

The Bank of England also kept its key rate unchanged in September. The Bank of Japan, meanwhile, is inching toward higher borrowing costs, as it loosens control on longer-term rates. 
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Zambian authorities say trade between the country and China increased to more than $5 billion in 2022, bringing an influx of Chinese products into local markets. Some Zambians appreciate having more choices, but others aren’t happy about the competition. Kathy Short reports from Lusaka. VOA footage by Richard Kille.
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As Afghans residing illegally in Pakistan leave on Islamabad’s orders, many local business owners are seeing labor shortages and a decline in business activity. VOA Pakistan Bureau Chief Sarah Zaman reports from the bulk produce market in Islamabad, where Afghans make up the majority of traders, vendors and manual labor. VOA footage by Malik Waqar Ahmed.
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A flow of recent data from the U.S. government has made one thing strikingly clear: A surge in consumer spending is fueling strong growth, demonstrating a resilience that has confounded economists, Federal Reserve officials and even the sour sentiments that Americans themselves have expressed in opinion polls.

Spending by consumers rose by a brisk 0.4% in September the government said Friday — even after adjusting for inflation and even as Americans face ever-higher borrowing costs.

Economists caution that such vigorous spending isn’t likely to continue in the coming months. Many households have been pulling money from a shrinking pool of savings. Others have been turning increasingly to credit cards. And the additional savings that tens of millions of households amassed during the pandemic — from stimulus aid and reduced opportunities to travel, dine out and visit entertainment venues — are nearly depleted, economists say.

Still, the truth is no one knows where things go from here, given the unusual nature of the post-pandemic economy. The “death of the consumer” and an ensuing recession have been forecast by most economists for at least a year. So far, not only is no recession in sight but consumers as a whole appear to be in robust health. Spending might cool in the coming months, yet it’s far from clear it will collapse.

On Thursday, the government said the economy accelerated at a 4.9% annual rate in the July-September quarter, the fastest such rate since 2021, on the back of a jump in Americans’ spending. People spent on used cars and restaurant meals, airfares and hotel rooms. Much of it, even after adjusting for higher prices, was for discretionary items that suggested that many people feel confident in their finances and job security.

The durability of that spending has caught the attention of Fed officials, who have signaled that they will keep their key interest rate unchanged when they meet this week. But they’ve also made clear that they are monitoring the economic data for any sign that inflation could reignite and require further rate hikes.

“I have been consistently surprised at the resilience of consumer spending,” Christopher Waller, an influential member of the Fed’s board, said in a speech this month.

In the meantime, businesses, especially those in the sprawling service sector, are benefiting from what still appears to be pent-up demand, likely driven by higher-income earners, after the restrictions of the pandemic. Last week, Royal Caribbean Group reported robust quarterly earnings. Travelers crowded their cruise ships and spent more even as the company raised prices.

“The acceleration of consumer spending on experiences [has] propelled us towards another outstanding quarter,” said CEO Jason Liberty. “Looking ahead, we see accelerating demand.”

So what’s behind the outsize gains, so far? Economists point to several drivers: Sturdy hiring and low unemployment, along with healthy finances for most households emerging from the pandemic. Wealthier households, in particular, have enjoyed substantial growth in home values and stock portfolios, which are likely juicing their spending.

Steady hiring has sent the unemployment rate down to a near-five-decade low of 3.8% and lifted to a record high the proportion of women in their prime working years — ages 25 through 54 — who are employed. Measures of layoffs are near historical lows. More jobs mean more income, which generally means more spending.

“We continue to believe that you shouldn’t bet against the consumer until actual job losses are on the horizon,” said Tim Duy, chief U.S. economist at SGH Macro Advisers.

In the July-September quarter, Americans ramped up spending on durable goods — furniture, appliances, jewelry and luggage — that people typically cut back on if they’re worried about their jobs or the economy.

With inflation slowing — it’s at a still-high 3.7%, down from a peak of 9.1% in June 2022 — average wages are starting to outpace price gains. By some measures, wage growth hasn’t yet fully offset the inflation surge that began in 2021. But since late last year, pay has risen faster than prices, likely fueling some spending.

In many lower-paying industries, like hotels, restaurants and warehouses, companies have struggled to find and keep workers and have raised pay accordingly. Julia Pollak, chief economist at ZipRecruiter, calculates that for the lowest-paid 10% of workers, wages have jumped 25% since the first quarter of 2020, when the pandemic began. That’s well ahead of the 18% increase in prices over that time.

And most households started 2023 in better shape than they were in before the pandemic erupted, according to a report from the Fed. The net worth of the median household — the midpoint between the richest and poorest — jumped 37% from 2019 through 2022 as home prices shot higher and the stock market rose. That was the biggest surge on records dating back more than 30 years.

Most of the savings that Americans have accumulated in the past three years have flowed to the wealthiest households, who have splurged on travel and other experiences. Typically, economists say, the wealthiest one-fifth of Americans account for about two-fifths of all spending.

The net worth of the richest one-tenth of households leaped by $28 trillion — or about one-third — from the first quarter of 2020 to the second quarter of 2023, according to the Fed. The poorer one-half of Americans gained a bigger percentage increase but in total dollars much less, from about $2 trillion to $3.6 trillion. (Those figures aren’t adjusted for inflation.)

“When wealth is growing by the amount that it has been the past three years … I do think that it’s playing a larger role in this spending strength than maybe we thought it would,” said Sarah Wolfe, U.S. economist at Morgan Stanley.

Small-business owners like Bret Csencsitz, managing partner of Gotham Restaurant in New York City, can attest to that. High-dollar spending by middle-age customers has helped replace many of his older patrons who moved out of the city during COVID. These customers, who typically work in technology and finance, are buying $150 to $200 bottles of wine and spending a little over $200 on steak for two.

The average per-person check is up over 20% to roughly $145 compared with the pre-pandemic days, he added, and he has had groups of up to 60 people holding dinners at his restaurant.

“People are back,” he said. “There’s more energy.”

Aditya Bhave, senior economist at Bank of America, noted that the spending isn’t all driven by the affluent. Spending on the bank’s credit and debit cards by households with incomes below $50,000 has risen faster than spending by higher-earning clients.

Some Americans, while keeping a close watch on their finances, still feel they have room to indulge themselves. Consider Valerie Zaffina, a 74-year-old retired teacher who was picking up a piece of jewelry last week at a Kohl’s store in Ramsey, New Jersey. She said she and her husband live on fixed incomes and are cautious spenders.

But Zaffina has nevertheless decided on one big splurge — about $5,000 to decorate her rental apartment, including a $2,500 couch and a $600 rug. It’s her first major decorating project in 18 years.

“I had kind of a frustrating year, and I wanted to do something for myself,” she said. “So, yeah, I’m redecorating. I’m in the throes of that, but I’m sticking to a budget.”

Many analysts still warn of a new crop of headwinds facing consumers and the economy. Nearly 30 million student loan borrowers had to start paying their loans this month, for example. And government dysfunction in Washington could lead to a government shutdown next month.

A report Friday showed that while inflation-adjusted income fell last month along with the savings rate, consumers still ramped up their spending. That trend, economists say, is unsustainable.

Even so, those challenges may not prove as damaging as feared. Student loan payments, for example, jumped even before an Oct. 1 deadline for resuming them, Bhave noted. And few borrowers appear to have taken advantage of a 12-month grace period the Biden administration put in place, suggesting that most borrowers can afford to resume paying the money back — at least for now.

And executives at Visa, which reported strong earnings and a surge of spending by their U.S. credit card customers overseas in the third quarter, have also downplayed the likely impact of student loan repayments.

The company isn’t “factoring in any impacts” from loan repayments “because we’ve yet to see any meaningful impact,” said Visa’s chief financial officer, Christopher Suh. “Consumer spending across all segments from high to low has remained stable since March.”

“There’s a lot of gloom and doom,” around the consumer, Bhave said. “And yet the data keep surprising to the upside.”
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Indonesia will exclude coal-fired power plants operated by industrial estates from its investment plan for a G7-led funding program to decarbonize its power sector, sources drafting the document told Reuters.

The decision means Jakarta will not lay out a path to shut the so-called captive coal power plants in its comprehensive investment and policy plan (CIPP) that it needs to secure $20 billion in funding pledged under the Just Energy Transition Partnership (JETP).

The plan is due to be published on Wednesday for public feedback.

JETP, a financing scheme made up of equity investments, grants and concessionary loans from members of Group of Seven (G7), multilateral banks and private lenders, is aimed at helping developing countries shift to cleaner energy in the power sector.

Coal-fired power plants operated by industries were being excluded from the plan because authorities needed more time to work out how to protect the nickel smelting sector, said one of the sources, who declined to be identified, adding that the exclusion would be temporary.

The exclusion will make it more difficult for Southeast Asia’s largest economy to meet its JETP target to cap power sector emissions at 290 million metric tons of CO2-equivalent by 2030 because the public sector will now be saddled with a greater share of the reduction burden.

Captive coal power stations with 13.74 gigawatt (GW) of capacity are operating in the Southeast Asian archipelago and 20.48 GW are being planned. The recent surge is due to the expansion of the metal processing sector, according to a July report that the Asian Development Bank commissioned.

Indonesia has pledged to stop commissioning new coal power plants but still allows new ones for smelters.

Indonesia’s decision not to include the industrial coal plants in its plan follows complaints from officials that the JETP financing terms were not as expected, with high interest on loans and only a small portion in grants. Half of the JETP commitments come from private lenders.

Indonesia is not the only country facing problems in implementing a JETP deal. 

G7 members offered Vietnam just 2% of its total $15.5 billion JETP financial package in grants, while the biggest chunk of its loans will carry market-determined interest rates, documents reviewed by Reuters showed.

There have also been questions over the inaugural JETP deal with South Africa, which is facing rolling blackouts. South Africa secured a $8.5 billion financing pledge.

‘Good decision’

Experts have said ensuring the success of Indonesia’s JETP is important not just because it is the biggest deal but it is also seen as a test of G7 commitment to work with developing nations.

Fabby Tumiwa, executive director of the Institute for Essential Services Reform think tank, part of a JETP technical working group, said it was better to exclude the coal-fired plants for now rather than delay the plan.

“If we wait for the analysis for captive power, we’re afraid JETP will not move forward. I think this is a good decision, so we can start with the information that we have,” Tumiwa said.

The International Partners Group of donors and lenders, with which Indonesia is making the agreement, has approved of the decision to focus on decarbonization by the state utility, provided that the carbon reduction targets will remain unchanged, said the source who declined to be identified.

The utility operates a grid with 69 GW power generation capacity, at the end of 2022, half powered by coal.

Indonesia has also said it is concerned about the extent of compensation from Western countries to shut coal power plants early to make way for renewable energy.

The CIPP will show only $2.5 billion of JETP funding is earmarked for closing coal plants, said Pradana Murti, a director at PT Sarana Multi Infrastruktur (SMI), a state-owned financing company managing energy transition funds.

Tumiwa said the plan would show Indonesia needs $95 billion until 2030 to reach JETP goals, while the first source said the figure could reach $120 billion. 
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Alan Mazzotti can see the Rocky Mountains about 30 miles west of his pumpkin patch in northeast Colorado on a clear day. He could tell the snow was abundant last winter, and verified it up close when he floated through fresh powder alongside his wife and three sons at the popular Winter Park Resort.

But one season of above-average snowfall wasn’t enough to refill the dwindling reservoir he relies on to irrigate his pumpkins. He received news this spring that his water delivery would be about half of what it was from the previous season, so he planted just half of his typical pumpkin crop. Then heavy rains in May and June brought plenty of water and turned fields into a muddy mess, preventing any additional planting many farmers might have wanted to do.

“By time it started raining and the rain started to affect our reservoir supplies and everything else, it was just too late for this year,” Mazzotti said.

For some pumpkin growers in states like Texas, New Mexico and Colorado, this year’s pumpkin crop was a reminder of the water challenges hitting agriculture across the Southwest and West as human-caused climate change exacerbates drought and heat extremes. Some farmers lost 20% or more of their predicted yields; others, like Mazzotti, left some land bare. Labor costs and inflation are also narrowing margins, hitting farmers’ ability to profit off what they sell to garden centers and pumpkin patches.

This year’s thirsty gourds are a symbol of the reality that farmers who rely on irrigation must continue to face season after season: they have to make choices, based on water allotments and the cost of electricity to pump it out of the ground, about which acres to plant and which crops they can gamble on to make it through hotter and drier summers.

Pumpkins can survive hot, dry weather to an extent, but this summer’s heat, which broke world records and brought temperatures well over 100 degrees Fahrenheit (38 degrees Celsius) to agricultural fields across the country, was just too much, said Mark Carroll, a Texas A&M extension agent for Floyd County, which he calls the “pumpkin capital” of the state.

“It’s one of the worst years we’ve had in several years,” Carroll said. Not only did the hot, dry weather surpass what irrigation could make up for, but pumpkins also need cooler weather to be harvested or they’ll start to decompose during the shipping process, sometimes disintegrating before they even arrive at stores.

America’s pumpkin powerhouse, Illinois, had a successful harvest on par with the last two years, according to the Illinois Farm Bureau. But this year it was so hot into the harvest season in Texas that farmers had to decide whether to risk cutting pumpkins off the vines at the usual time or wait and miss the start of the fall pumpkin rush. Adding to the problem, irrigation costs more as groundwater levels continue to drop — driving some farmers’ energy bills to pump water into the thousands of dollars every month.

Lindsey Pyle, who farms 950 acres of pumpkins in North Texas about an hour outside Lubbock, has seen her energy bills go up too, alongside the cost of just about everything else, from supplies and chemicals to seed and fuel. She lost about 20% of her yield. She added that pumpkins can be hard to predict earlier in the growing season because the vines might look lush and green, but not bloom and produce fruit if they aren’t getting enough water.

Steven Ness, who grows pinto beans and pumpkins in central New Mexico, said the rising cost of irrigation as groundwater dwindles is an issue across the board for farmers in the region. That can inform what farmers choose to grow, because if corn and pumpkins use about the same amount of water, they might get more money per acre for selling pumpkins, a more lucrative crop.

But at the end of the day, “our real problem is groundwater, … the lack of deep moisture and the lack of water in the aquifer,” Ness said. That’s a problem that likely won’t go away because aquifers can take hundreds or thousands of years to refill after overuse, and climate change is reducing the very rain and snow needed to recharge them in the arid West.

Jill Graves, who added a pumpkin patch to her blueberry farm about an hour east of Dallas about three years ago, said they had to give up on growing their own pumpkins this year and source them from a wholesaler. Graves said the pumpkins she bought rotted more quickly than in past years, but it was better than what little they grew themselves.

Still, she thinks they’ll try again next year. “They worked perfect the first two years,” she said. “We didn’t have any problems.”

Mazzotti, for his part, says that with not enough water, you “might as well not farm” — but even so, he sees labor as the bigger issue. Farmers in Colorado have been dealing with water cutbacks for a long time, and they’re used to it. However, pumpkins can’t be harvested by machine like corn can, so they require lots of people to determine they’re ripe, cut them off the vines and prepare them for shipping. 

He hires guest workers through the H-2A program, but Colorado recently instituted a law ensuring farmworkers to be paid overtime — something most states don’t require. That makes it tough to maintain competitive prices with places where laborers are paid less, and the increasing costs of irrigation and supplies stack onto that, creating what Mazzotti calls a “no-win situation.”

He’ll keep farming pumpkins for a bit longer, but “there’s no future after me,” he said. “My boys won’t farm.” 
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Jeep maker Stellantis reached a tentative contract agreement with the United Auto Workers union on Saturday. 

The Stellantis deal, which still must be ratified by members, leaves only General Motors without an agreement with the union.  

Later Saturday night, the union walked out at a GM factory in Spring Hill, Tennessee, in an effort to increase pressure on the company to reach a deal. 

The Stellantis deal mirrors one reached earlier this week with Ford. The union says the contract also saves jobs at a factory in Belvidere, Illinois, that Stellantis had planned to close. 

GM said it was disappointed with the additional strike at the Spring Hill assembly and propulsion systems plant “in light of the progress we have made.” The company said in a statement that it has bargained in good faith with the union and wants to reach a deal as soon as possible. 

Spring Hill is GM’s largest manufacturing facility in North America with about 1 million square meters of building space and almost 4,000 employees. It makes the electric Cadillac Lyriq as well as the GMC Acadia and Cadillac XT5 and XT6 crossover SUVs. 

A message was left Saturday night seeking comment from the union. 

‘We have moved mountains’

UAW President Shawn Fain confirmed the Stellantis agreement in a video appearance Saturday evening and said that 43,000 members at the company still have to vote on the deal. 

About 14,000 UAW workers who were on strike at two Stellantis assembly plants in Michigan and Ohio, and several parts distribution centers across the country, were told to drop their picket signs and return to work. The agreement will end a six-week strike at the maker of Jeep and Ram vehicles. 

The pact includes 25% in general wage increases over the next 4½ years for top assembly plant workers, with 11% coming once the deal is ratified. Workers also will get cost-of-living pay that would bring the raises to a compounded 33%, with top assembly plant workers making more than $42 per hour. At Stellantis, top-scale workers now make around $31 per hour. 

Like the Ford contract, the Stellantis deal would run through April 30, 2028. 

Under the deal, the union said it saved jobs in Belvidere as well as at an engine plant in Trenton, Michigan, and a machining factory in Toledo, Ohio. 

“We’ve done the impossible. We have moved mountains. We have reopened an assembly plant that was closed,” Fain said. 

The deal includes a commitment by Stellantis to build a new midsize truck at its factory in Belvidere, Illinois, that was slated to be closed. About 1,200 workers will be hired back, plus another 1,000 workers will be added for a new electric vehicle battery plant, the union said. 

“We’re bringing back both combustion vehicles and electric vehicle jobs to Belvidere,” Fain said. 

Vice President Rich Boyer, who led the Stellantis talks, said the workforce will be doubled at the Toledo, Ohio, machining plant. The union, he said, won $19 billion worth of investment across the U.S. 

Fain said Stellantis had proposed cutting 5,000 U.S. jobs, but the union’s strike changed that to adding 5,000 jobs by the end of the contract. 

In a statement, the UAW said the Stellantis agreement has gains worth more than four times the improvements in the 2019 contract with the UAW. Through April of 2028, a top-scale assembly plant worker’s base wage will increase more than all the increases in the past 22 years. 

Starting wages for new hires will rise 67% including cost-of-living adjustments to more than $30 per hour, the union said. Temporary workers will get raises of more than 165%, while workers at parts centers will get an immediate 76% increase if the contract is ratified. 

Like the Ford agreement, it will take just three years for new workers to get to the top of the assembly pay scale, the union said. 

The union also won the right to strike over plant closures at Stellantis, and it can strike if the company doesn’t meet product and investment commitments, Fain said. 

Workers expected to OK deal

Bruce Baumhower, president of the local union at a large Stellantis Jeep factory in Toledo, Ohio, that has been on strike since September, said he expects workers will vote to approve the deal because of the pay raises above 30% and a large raise immediately. 

The union began targeted strikes against all three automakers on Sept. 15 after its contracts with the companies expired. At the peak, about 46,000 workers were on strike against all three companies, about one-third of the union’s 146,000 members at the Detroit three. 

With the Ford deal, which established the pattern for the other two companies, workers with pensions will see small increases when they retire, and those hired after 2007 with 401(k) plans will get large increases. For the first time, the union will have the right to go on strike over company plans to close factories. Temporary workers also will get large raises, and Ford agreed to shorten to three years the time it takes for new hires to reach the top of the pay scale. 

Other union leaders who followed more aggressive bargaining strategies in recent months have also secured pay hikes and other benefits for their members. Last month, the union representing Hollywood writers called off a nearly five-month strike after scoring some wins in compensation, length of employment, and other areas. 

Outside the Sterling Heights plant, some workers said they looked forward to a ratification vote and going back to work. 

“The tentative agreement is excellent,” said Anthony Collier, 54, of Sterling Heights, Michigan. “We hear that it’s going to be parity, at least, with Ford, so we believe a lot of people are looking forward to signing. Most of us had to dip into savings, get loans. Everybody knows the economy went up on all of us, so it’s a little tight to be out on strike pay.” 
…

Ugandan economists and officials expressed confidence in the country’s economy and urged investors to ignore a U.S. government advisory about risks they may face if they conduct business there.

The advisory, in the U.S. 2023 Investment Climate Statements, warned of the financial and reputational risks posed by endemic corruption in Uganda.

The statement also noted Uganda’s enactment of the Anti-Homosexuality Act in May, a move condemned by LGBTQ+ advocates worldwide.

Morrison Rwakakamba, chairperson of the Uganda Investment Authority, a government arm mandated with promoting investment in the country, told VOA that organizations such as the Oxford University Center of African Economies have ranked Uganda as one of the least risky economies on the continent.

The African Development Bank’s 2023 report also ranked Uganda among the top investment destinations in East Africa.

According to the African Development Bank, Uganda’s gross domestic product is projected to grow 6.5% in 2023 and 6.7% in 2024, assuming any global growth slowdown will be short lived.

Rwakakamba said current investors are rational and know they will continue to make money in Uganda.

“Investors follow money. Investors don’t follow geopolitics,” he said. “They don’t follow cultural wars that seem to be what is embedded in that advisory. … We even also continue to encourage our American investors that there is money to be made in Africa. There’s money to be made in Uganda because of the market, because of the return on investment. We are not worried about these advisories.”

The Uganda Investment Authority said the country has seen exponential growth in direct foreign investment over the past four years from investors in United Arab Emirates, China, Germany, Japan and the Netherlands, among others.

However, Corti Paul Lakuma, a senior research fellow and head of the macroeconomics department at the Economic Policy Research Centre in Kampala, said the advisory is a disadvantage for Uganda because the country still wants to attract investors.

Despite investments from China, India and Europe, Lakuma said, Uganda cannot disregard the fact that the United States is still the biggest social and public investor in the sectors of health and education.

“Those other countries, yes, they are good and dependable, but their kind of investments are different from the investments America makes,” Lakuma said. “America makes investments with long-term repayment period and return period. Not many countries are willing to take that risk.”

Rwakakamba argued that even though there is corruption in Uganda, the East African country has set up online mechanisms that enable direct contact between potential investors and Ugandan officials, in an effort to cut out middlemen who demand bribes.

Regarding the Anti-Homosexuality Act, Uganda has experienced a political backlash for what has been described as the harshest law against the LGBTQ+ community in the world.

Lakuma said Uganda may need to reconsider the law.

“The world is becoming very sensitive [to] issues of diversity, inclusivity,” he said. “I think it demanded for some sensitivity from our lawmakers. We don’t live in a vacuum, even though we want to keep our cultures and morals. But also, you must observe what is the changing world order.”

In August, the World Bank said the Anti-Homosexuality Act contradicted its values. The bank said it would halt new loans to Uganda until it could test measures to prevent discrimination in the Ugandan projects it finances.
…

The U.S. economy grew at its fastest pace in nearly two years in the third quarter as higher wages from a tight labor market helped to power consumer spending, again defying dire warnings of a recession that have lingered since 2022.

Gross domestic product increased at a 4.9% annualized rate last quarter, the fastest since the fourth quarter of 2021, the Commerce Department’s Bureau of Economic Analysis said in its advance estimate of third-quarter GDP growth. Economists polled by Reuters had forecast GDP rising at a 4.3% rate.

Estimates ranged from as low as a 2.5% rate to as high as a 6.0% pace, a wide margin reflecting that some of the input data, including September durable goods orders, goods trade deficit, wholesale and retail inventory numbers were published at the same time as the GDP report.

The economy grew at a 2.1% pace in the April-June quarter and is expanding at a pace well above what Fed officials regard as the non-inflationary growth rate of around 1.8%.

While the robust growth pace notched last quarter is unlikely sustainable, it was testament to the economy’s resilience despite aggressive interest rate hikes from the Federal Reserve. Growth could slow in the fourth quarter because of the United Auto Workers strikes and the resumption student loan repayments by millions of Americans.

Most economists have revised their forecasts and now believe that the Fed can to engineer a “soft-landing” for the economy, pointing to strength in worker productivity and moderation in unit labor costs growth in the second quarter, which they expected carried through into the July-September period.  

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was the main driver.

A strong labor market is providing underlying support to spending. Though wage growth has slowed, it is rising a bit faster than inflation, lifting households’ purchasing power.  

Labor market resilience was highlighted by a separate report from the Labor Department on Thursday, showing the number of people filing new claims for state unemployment benefits rose to a seasonally adjusted 210,000 during the week ending Oct. 21 from 200,000 in the prior week.

The GDP data likely has no impact on near-term monetary policy amid a surge in U.S. Treasury yields and stock market selloff, which have tightened financial conditions.  

Financial markets expect the Fed to keep interest rates unchanged at its Oct. 31-Nov. 1 policy meeting, according to CME Group’s FedWatch. Since March, the U.S. central bank has raised its benchmark overnight interest rate by 525 basis points to the current 5.25% to 5.50% range. 
…