United States’ real gross domestic product (GDP) increased at an annual rate of 3.4% in the third quarter, a 1.2% jump from the previous quarter, according to the U.S. Bureau of Economic Analysis. This growth was driven by increased investment, consumer and government spending that was dampened by a decrease in exports, while imports increased.
In October, the U.S. added 165,000 jobs, increasing employment in professional and business services, health care, transportation and warehousing, per the U.S. Bureau of Labor Statistics. The unemployment rate decreased slightly to 4.1%.
Despite employment growth, U.S. inflation rose faster than expected at a 0.4% price increase, a 0.2% decrease from September. Analysts expected prices to rise by 0.3%, and the higher-than-expected pace could further support interest rate hikes, according to BBC.
Following the Democratic midterm election victory, U.S. bond yields fell as investors expected less government spending, particularly on artificial intelligence (AI), per ActionForex. As struggling stock markets increased demand for safer investments, pushing yields lower; gold recovered toward $4,000. Additionally, WTI crude oil dropped more than 10%, while the election result increased pressure to end the Iran war and reduce rising living costs.
While there are concerns that the change in power could result in standoffs over the debt ceiling, “Democrats are likely to leverage [an impasse] to win policy concessions,” wrote Jan Hatzius, chief economist at Goldman Sachs, CNBC reported. “It is not yet clear what Democrats will seek in return, but limiting the war with Iran, tariff rollbacks, the reversal of spending cuts and expanded health benefits appear to be high on the list of priorities.”
In October, customers in the United States paid 13 days beyond terms on average, a 6-point drop from June, according to FCIB’s Credit and Collections Survey. For the majority of respondents, payment delays have stayed the same, but 26% are seeing an increase, 3% fewer than previously reported. The most common causes of delays are down to billing disputes (65%) and cash flow issues (58%).
One respondent advised that creditors set clear payment expectations upfront by ensuring billing policies, payment terms and discount terms. “Ensure payment schedules are clearly defined, communicated and agreed to before doing business,” they continued.
“Actively monitor credit exposure and payment behavior, enforcing credit limits, addressing disputes promptly and watching for warning signs of financial distress,” another respondent wrote.
The bottom line: U.S. economic growth and collections are improving, but payment pressures haven’t fully eased. Credit teams should keep watching customer payment patterns.
