The US economy experienced a near-recession in the third quarter of last year, but unexpected growth has been observed, reaching 3.2% and higher.

The Atlanta Fed GDP nowcast estimates July-September output growth at 5.8%, indicating strong consumption and an unexpected rebound in industrial production and housing starts.

Consumers have been spending more than projected, and the hot services economy has replaced goods-gorging purchases from the coronavirus outbreak.

However, high interest rates may not work as well in an economy that spends more on less rate-sensitive services and businesses have borrowed and invested more than expected.

Local government spending increased unexpectedly as communities withheld funds from the pandemic.

The odds of a tighter economy and inflation-killing downturn are decreasing, but the economy’s broad strength may be more lasting than predicted.