Considering the recent economic gloom from a recessionary yield curve to a hand-wringing Federal Reserve and predictors of catastrophe from China to the UK, it is remarkable that American consumers have kept their focus on jobs and household budgets rather than the market interpretations.
The US economy expanded at a 1.9% annualized pace in the third quarter, considerably better than the 1.6% forecast and slightly lower than the 2.0% expansion in the second quarter.
Personal consumption rose at a 2.9% yearly rate and accounted for all of the GDP increase while government expenditures expanded 2.0% and domestic private investment which included business spending, declined 1.5%.
On the quarter consumption rose 1.93% and the gain in government spending of 0.35% was offset by fixed investment -0.22%, inventories -0.05% and net trade -0.08%.
Retail sales in the GDP component control group moderated in the third quarter with the monthly increase falling to 0.4% from 0.57% in the second quarter but job creation climbed to 157,000 per month from 152,000 and annual wages increases stayed at the top of their decade range at 3.0%.
Reuters
Business spending and sentiment have been falling for more than a year as the two-year old trade war with China damaged exports and sapped optimism and inhibited expansion. The purchasing managers’ index in manufacturing slipped into contraction in August and September.
The recently announced trade agreement with China is expected to be signed sometime in November at which point it may begin to reverse some of the business apprehensions that have accumulated with the tariffs.
The steady US economic growth in spite of the global headwinds will no doubt cheer the Federal Reserve governors and may have implications for their rate decision to be delivered at 2:00 pm EDT today.
The Bureau of Labor Statistics will release the October payroll report on Friday November 1st at 12:30 GMT, 8:30 EDT.
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