U.S. Outlook: Why recent GDP growth doesn’t look sustainable

Posted By Scott Anderson In Economic Outlook | No Comments

Headline third-quarter GDP growth came in at a robust 3.5% after coming off of a sizzling 4.2% pace of growth in the second quarter.

Two signs in store window for sales - 50% and 70% - with reflection of shoppers faintly visible. [1]However, the foundation that this growth is built upon is looking a little shaky.

For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on Oct. 26.

Key observations:
  • Robust consumer spending and inventory building drove the strong GDP growth last quarter.
  • Residential construction spending is already contracting, dropping at a 4.0% pace in the third quarter.
  • Perhaps the most convincing reason to be skeptical about continued growth at recent rates is the fact that business participation in the expansion is declining, rather than ramping up.
  • We expect U.S. GDP growth to slow again in the fourth quarter to around a 2.4% pace, and continue to gradually slow in 2019.
Read my full report. [2]

Article printed from Bank of the West: https://changematters.bankofthewest.com

URL to article: https://changematters.bankofthewest.com/2018/10/26/u-s-outlook-why-recent-gdp-growth-doesnt-look-sustainable/

URLs in this post:

[1] Image: http://blog.bankofthewest.com/wp-content/uploads/2018/02/sales_signs_crop.jpg

[2] Read my full report.: http://blog.bankofthewest.com/wp-content/uploads/2018/10/BankoftheWest_USOutlook_10_26_18.pdf

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