Real GDP rose at a seasonally adjusted annualized rate (SAAR) if 2.9% according to the BEA’s Advance Estimate.
The acceleration in real GDP growth in the third quarter reflected an upturn in private inventory investment, an acceleration in exports, a smaller decrease in state and local government spending, and an upturn in federal government spending. These were partly offset by a smaller increase in PCE, and a larger increase in imports.
Exports surged 10%, imports 2.3%.
Real GDP
Doug Short at Advisor perspectives provides his usual fine display of charts in Q3 GDP Advance Estimate: A Surprisingly Strong 2.9%
The above chart shows the annualized% change from the preceding quarter in Real (inflation-adjusted) Gross Domestic Product and recessions as determined by the National Bureau of Economic Research (NBER). Also illustrated are the 3.22% average (arithmetic mean) and the 10-year moving average, currently at 1.39%.
Real GDP Historic Trend
Real Quarterly GDP Year-Over-Year Percent Change
A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. The average rate at the start of recessions is 3.35%. Ten of the eleven recessions over this timeframe have begun at a higher level of real YoY GDP.
The above three charts courtesy of Doug Short and Advisor Perspectives.
GDP Estimates
- GDPNow 3rd Quarter: 2.1%
- FRBNY Nowcast 3rd Quarter: 2.2%
- Markit 3rd Quarter: 1.0%
- Econoday 3rd quarter consensus: 2.5%
It’s far too early to proclaim a winner. Revisions explain why.
Expect Revisions
The average revision from Advance to the Second estimate is 0.5 percentage points, in either direction.
Because of ongoing revisions, the average change from advance to the latest estimate is a whopping 1.1 percentage points, perhaps years or even a decade later.
For now, unless data weakens considerably between now and the December FOMC meeting, the Fed is going to get in a December rate hike.
Meanwhile, a surging US dollar is likely to dampen export growth for the 4th quarter.
Mike “Mish” Shedlock
With soybean exports making up 0.9% of the “Growth”
Or, said otherwise, soybean exports were responsible for just under a third, or 0.9% of “growth” in the world’s biggest economy. Which is bad news: as Capital Economics’ Ian Shepherdson said, “The soybean boost is indeed a one-time thing. It has no implications for trend growth and likely will reverse over the next couple quarters.”
Agricultural exports are limited to what is on hand, there will not be any more soybeans until fall of 2017. If there is a surge one month, it will mean reduced exports in coming months. Plus, a lower supply will mean higher prices which will also dampen sales.
I should add that sales of ag products like corn & beans are likely to be high at this time because prices are usually lowest around harvest time, which is just wrapping up. Sellers are anxious to move remaining old crop out of storage to make room for the new crop.
“The soybean boost is indeed a one-time thing”
Why’s that then? Don’t they harvest soy beans this time every year?
Let me be the first comment to question the integrity of the data, what with the election coming up and all.
Yay! 2.9 instead of the the expected 2.4 – dancing in the streets!! The economy grew by about $130 billion in Q3. The only problem is that the national debt grew by $190 billion (http://www.treasurydirect.gov/NP/debt/current) over the same period.
Tim, you’re a party pooper.
And I feel appropriately bad about it.
“… and an upturn in federal government spending.”
Electioneering.
“For now, unless data weakens considerably between now and the December FOMC meeting, the Fed is going to get in a December rate hike”.
Likely.
And it will be fun to watch the “experts” go “wtf” when rates on long end don’t budge … or drop.
Well, they didn’t go for the big lie I predicted of 4% SAAR. However, note one curious thing- the last time GDP growth was this high was the same quarter in 2014, just before the midterm elections. Coincidence?
Today with so many people understanding that deficit government spending helps drive the economy. It might be wise for our leaders in Washington to consider giving us taxpayers a break by halting all taxation. This would kick the GDP into high gear.
Just End It! Such a policy would go a long way to diminish the divide polarizing our nation. I do not know anyone who likes to pay taxes or go through hours and hours of record keeping. The article below delves into the joy and benefits of such a policy.
http://brucewilds.blogspot.com/2016/10/why-not-stop-taxation-altogether-just.html