will be high now but lower in the next period. thus, we want to be careful and not pay too much attention to the specific month activity took place but instead average growth over a couple of quarters to get a clearer picture of the underlying strength of the economy. to see this point more clearly, recall that at the start of this year, personal consumption expenditures increased dramatically in the first quarter but subsequently grew less rapidly in q2 of 2023. a similar dynamic may be playing out now. on the other hand, if the third quarter data represents the beginning of persistently stronger demand, then we can expect that strength to show up in the fourth - quarter data, including by putting upward pressure on prices, which could have ramifications for upcoming decisions on monetary policy. in thinking about these two possibilities, let me tell you how i view two key components of gdp growth this year. consumer spending, which represents nearly 70 percent of gdp, has been quite strong thus far in 2023. while household spending has been volatile, smoothing it out over the past several quarters indicates underlying momentum. yesterday's september retail sales data indicated continued strong spending. the solid spending in the face of tightened monetary policy suggests consumption is likely supported by households'strong balance sheets as well as confidence in future 2 / 5 bis - central bankers'speeches labor income. i will be watching the spending data carefully, including those that hint at a slowdown. though hard to measure, it seems that households are drawing down their liquid assets. some other data supporting a slowing include more use of credit cards this year and a return of delinquency rates for consumer loans, which plunged over the course of the pandemic, to essentially their pre - pandemic levels. 2 also, as i mentioned earlier, financial conditions have tightened considerably since july. of course, i have been waiting a while for tightening financial conditions to cause a significant slowing of spending, and i have been consistently surprised at the resilience of consumer spending. so i will be patient in waiting for the data to document how spending evolves. another component of gdp that i'll be watching is investment in non - residential structures. manufacturing investment boosted real gdp growth in the first half of the year, partly driven by a surge in the construction of semiconductor and electric battery factories that began before new government subsidies were enacted and driven higher by that legislation. recent data suggests this spending is leveling off at a new, higher level : construction spending growth

you look today at the results obtained in terms of the yield curve and inflation expectations, you can appreciate the strategy followed by the ecb in the rate - cutting phase. one point on which i don ’ t agree with franco bruni ’ s analysis concerns his judgement on changing the objective of monetary policy after the failure of lehman brothers on 15 september 2008. bruni writes : “ … the objective became only that of saving the credit system from the collapse. this last change of objective is of great conceptual and political importance, it has a significance that could prove to be, so to speak, historic. and yet it has never been officially declared, particularly by the ecb ”. the proof that he provides for the above remarks is the decision to reduce interest rates from 2 % to 1. 5 % in march this year, a step which, in his opinion, was not justified by the trend of the economy, but by the problems facing europe ’ s banking system. there is a misunderstanding here that needs to be quickly clarified, also in view of the ensuing discussion on macro - prudential supervision and on the powers of the central banks in question. from the outset of the crisis in august 2007, the ecb has pursued a policy of separation between, on the one hand, the interest rate decisions, based solely on the priority objective of price stability and, on the other hand, the decisions concerning the instruments used to pump liquidity into the system in order to tackle the difficulties being encountered by the market. the most obvious example of the separation is precisely the one which occurred on 9 august 2007, when amid market tensions, it was decided both to maintain the rates unchanged and to intervene on a substantial scale to satisfy the banks ’ demand for liquidity, with a €90 billion operation. and the same separation has been continued in all the months since then. that the decision to reduce interest rates in march to 1. 5 % was justified is, i believe, evident from the growth and inflation estimates published at that time. i remember the ecb staff projections were pointing to euro area gdp growth for 2009 and 2010 being equal to - 2. 7 % and 0. 0 % and inflation of 0. 5 % and 1. 1 % respectively. also taking into account the relevant horizon for monetary policy, between one and two years ahead, an interest rate of 2 % “ three questions on monetary policy easing ”, university of ancona, 6 march 2009 ( available at www. ecb.