The Federal Reserve left interest rates unchanged on Wednesday, despite stubborn inflation that has resisted the central bank's fight to cool price increases.

The move allows previous rate increases to take greater hold of the economy and grants the central bank time to assess whether another hike will be necessary.

Once bemoaned as a source of recession worries, the U.S. economy has become a wellspring of good news: blistering growth, robust hiring and consumers opening their wallets for everything from concert tickets to bar tabs.

Last week we learned that the economy, far from sliding toward recession as economists had predicted over the past year, has actually picked up steam thanks to indefatigable consumers.

Not only has economic output made up all the ground lost during the pandemic, but it is also above where it would have been had the pandemic never happened, judging by what the Congressional Budget Office projected in early 2020.

For those who follow closely the Atlanta Fed’s invaluable GDPNow estimate, today’s 4.9 percent real annual growth rate for the third quarter was a slightly negative surprise, as the mavens in Atlanta expected the number to be north of 5 percent. But for virtually everyone else who has been dining on a steady diet of “soft landing” rhetoric from Fed watchers, it was a major upside surprise. So, what’s going on?

The bottom line is that there are two parts to the story, one short run and transitory and the other long run and a major factor for the outlook into next year.

U.S. economic growth surged this summer, as consumers boosted spending ahead of growing challenges that could limit their ability to maintain the momentum.

Gross domestic product grew at a seasonally- and inflation-adjusted 4.9% annual rate in the third quarter, the Commerce Department reported Thursday. That was the fastest rate since late 2021 and much stronger than economists were anticipating just a few months ago. The economy expanded 2.1% in the second quarter.

The U.S. economy grew at a blistering pace over three months ending in September, more than doubling growth in the previous quarter and rebuking worries about a possible recession. The robust performance, however, complicates the fight to dial back inflation.

Fresh GDP data released on Thursday, which exceeded economist expectations, reinforces other recent indicators of a strong economy resisting the Federal Reserve's effort to cool price increases with a slowdown.

U.S. consumers treated themselves this summer, scooping up concert tickets to likes of Taylor Swift and Beyonce, singing and dancing to sold-out shows, while also driving record numbers for U.S. air travel. 

Gross domestic product (GDP), came in at 4.9%, way above the 4.3% to 4.5% estimates and more than double the second-quarter’s 2.1% read. 

The news about China’s economy over the past few weeks has been daunting, to put it mildly.

The country’s growth has fallen from its usual brisk 8 percent annual pace to more like 3 percent. Real estate companies are imploding after a decade of overbuilding. And China’s citizens, frustrated by lengthy coronavirus lockdowns and losing confidence in the government, haven’t been able to consume their way out of the country’s pandemic-era malaise.

After decades of incredible growth, China was widely considered poised to overtake the U.S. as the biggest economy in the world, with its GDP surpassing that of America in the coming 10 to 25 years. But an unexpected slowdown of its economy is now making this increasingly unlikely, experts told Newsweek.

A disturbing characteristic of Jerome Powell’s Federal Reserve is how US-centric it has become. In following its data-dependent interest rate policy, the Fed makes little reference to world economic developments in general and to those in China in particular. It does so even though those developments could materially impact our economy. This is all the more surprising at a time when China, the world’s second-largest economy and, until recently, its main engine of growth, is in deep economic trouble.