US Q3 GDP final 4.1% vs 3.6% expected
1. The strongest annualized rate of growth since the end of 2011
- downright impressive
- A stronger consumer in Q3 than previously reported
- Inventories still account for two-thirds of the growth in Q3, which will subtract from the current quarter. –Lindsey Piegza, Sterne Agee
2. Underlying momentum in U.S. economic activity has shifted up a gear in Q3
- Much of the gain in overall activity was due to inventory accumulation
- Strength in domestic consumption and investment activity points a more constructive narrative on economic activity that previously thought. –Millan Mulraine, TD Securities
3. The economy gathered momentum steadily since late last year, and economists increasingly expect that momentum to continue into next year
- Excluding inventory build, the economy still would have grown at a solid pace, supported by improvement in consumer spending and investment. –Jim Baird, Plante Moran Financial Advisors
4. An unsustainably sharp build in inventories.
- Final sales to domestic purchases, a cleaner gauge of domestic demand, was revised up to 2.3% from 1.8%, an encouraging development, but still consistent with the recent range –Peter Newland, Barclays Capital
5. Real final GDP, which strips out the impact of inventory building was also revised higher to 2.5% for its best showing since quarter one of 2012 – Andrew Wilkinson, Miller Tabak & Co.
6. The revision was entirely concentrated in final demand which is now estimated to have grown by 2.5% up from previously calculated 1.9%, and the highest level since Q1 2012
- Chairman Bernanke in in his press conference following the FOMC meeting this week mentioned stronger consumption as one of the reasons to believe the recovery will pick up.
- The main driver of the upward revision in Q3 was private consumption in both services and goods. –Yelena Shulyatyeva, BNP Paribas
7. We now see Q4 GDP growth tracking at +2.1% instead of +2.0%
- That would leave full year 2013 growth at +2.5% on a Q4/Q4 basis, up from +2.0% in 2012 and 2011 and a very impressive performance given the 1.75% of GDP federal fiscal drag this year from the tax hikes and sequester spending cuts plus the additional short-term drag from the government shutdown. –Ted Wieseman, Morgan Stanley
8. The third quarter data now show consumer spending grew at a relatively solid 2.0% annual rate.
- As consumer spending constitutes two-thirds of GDP, the health of this sector is a prerequisite to 2014’s forecast of faster economic growth. –Doug Handler, IHS Global Insight
