U.S. Outlook: Solid GDP growth in Q3; what’s in store for Q4?
U.S. GDP growth rebounded convincingly in the third quarter, according to this morning’s initial estimate by the Bureau of Economic Analysis. GDP increased at a 2.9% annualized pace over the last three months – a noticeable step up from the 1.4% growth rate in the second quarter and 1.0% annualized pace from the fourth quarter of 2015 through the first half of 2016.
Economists bumped up their GDP estimates for the third quarter significantly over the last few days as a better-than-expected September advanced trade in goods report revealed an outsized gain in exports and drop in imports on the month. Goods exports increased at a 10.8% annualized pace last month led by large monthly increases in consumer goods, capital goods, and industrial supplies exports. Automobile and food and beverage exports fell.
For more insights, see highlights of my weekly report below, followed by a link to the full U.S. Outlook, delivered on Oct. 28.Key observations:
- Imports of consumer goods, capital goods, and industrial supplies slipped last month, while imports of automobiles increased 4.3% on a monthly basis.
- Net exports improved by $35.6 billion in the third quarter to -$522.9 billion on an annualized basis, adding a big 0.83 percentage points to the quarter’s GDP estimate.
- Business inventories reversed their second quarter $9.5 billion decline, rising by $12.6 billion dollars over the third quarter and adding another 0.61 percentage points to U.S. GDP growth.