Economic Watch: GDP Growth Roars Back, Hits ‘Turning Point’
Growth in the U.S. economy accelerated in the third quarter of the year, posting its biggest gain in two years, according to Commerce Department numbers released Friday morning. However, a separate report shows consumer confidence slipped.
The nation's gross domestic product (GDP) expanded at an annual pace of 2.9% from July through September.
This is up sharply from an annual rate of barely more than 1% in the first half of the year and a 1.4% pace in the second quarter. And it's better than a 2.5% consensus estimate from Wall Street analysts.
“The economy hit a turning point in the third quarter with more balanced growth; still not running on all cylinders, but getting closer,” said Diane Swonk, analyst at DS Economics in her Twitter feed.
Adding to the improved GDP growth rate were positive contributions in the form of personal spending (though down from the previous quarter); exports, which had the biggest gain in about three years; as well as increased private inventory investment and federal spending.
While the acceleration in GDP growth was encouraging, details were somewhat less favorable, according to Royal Bank of Canada Economics. In particular, they pointed to a sharp add to growth from the volatile inventory component, contributing 0.6 of a percentage point to the third quarter growth rate following a 1.2 percentage point subtraction in the second quarter; and a large addition from net trade that RBC said “looks too strong to be sustained given U.S. dollar strength.”
“Although the details of the report point to some early downside risk to our forecast for a 2.7% GDP gain in fourth quarter, we continue to expect underlying activity has returned to an above-trend pace of growth after a disappointing first half of the year,” said Nathan Janzen, RBC senior economist.
He noted household spending continues to be supported by improving ...Read the rest of this story
