U.S. Outlook: Ignore the headline – Q3 GDP report was solid
Real GDP growth for the third quarter (1.5%) was a big deterioration from the second quarter’s 3.9% growth, but in this instance the headline was deceiving.
For more on this and other economic developments this week, see my full report. Highlights are outlined below, followed by a link to the full U.S. Outlook report, delivered on Oct 30.Key observations:
- The drop in inventory gains in Q3 is just an adjustment to the mean and is not likely to be repeated in the quarters ahead.
- Real consumer spending held above 3% for the second quarter in a row, and we anticipate a similar performance in Q4.
- Despite all the hand wringing about the strong U.S. dollar, the trade balance only deteriorated by $1.6 billion last quarter.
- Our current forecast for Q4 real GDP growth is 2.5%.