Strong consumer spending and business investment and a slightly lower than previously reported trade deficit meant the US economy grew at a 3.9 per cent rate in the third quarter, the Commerce Department said.
The upward revision from the 3.7 per cent advance estimate was above consensus expectations and represented a rebound from 3.3 per cent growth in the second quarter.
Core personal consumption expenditures inflation, excluding food and energy, the Federal Reserve’s preferred measure of inflation, was unchanged at a 0.7 per cent rate in the quarter – the lowest reading since the 1960s.
Hello? Did you get this? Strong growth, low inflation…why, it’s like the New, New Economy!
The report provided further support for the Fed’s case that the economy has picked up, after an earlier soft patch, and that with inflation under control it will be able to raise rates at a “measured” pace. Investors see another quarter point increase to 2.25 per cent as likely when the Fed meets later this month.[...] [C]onsumer spending rose at a 5.1 per cent in the third quarter, the Commerce Department said, stronger than its advance estimate and well above the 1.6 per cent rate recorded in the second quarter.
Business investment was revised up and equipment investment rose at a strong 17.2 per cent rate.
The US trade deficit in the quarter was revised down from $598bn to $588bn.[...]
Inventory accumulation slowed more than previously reported, a drag on growth in the quarter but a good sign for growth in the coming months.
Kathleen Stephansen, economist at Credit Suisse First Boston in New York, said the revisions pointed to more balanced growth – with consumer spending and business investment up, and improved trade position and lower inventories. “It is not a dramatic change but a better balance of growth and lower inventories bodes well for the fourth quarter,” she said.
Corporate profits from current production rose 8.4 per cent from a year ago, but dropped 2.4 per cent from the second quarter. Economists said the quarterly decline largely reflected insurance claims related to hurricane damage, but that the trend was still one of moderating profits after strong profit growth last year.
U.S. job growth soared in October, blowing away even the most optimistic forecasts on Wall Street [...]
Employers added 337,000 jobs to their payrolls last month, up from a revised 139,000 in September, the Labor Department reported. Economists surveyed by Briefing.com were looking for a gain of 175,000.[...]
The jump in payrolls was the best gain since a gain of 353,000 new jobs in March kicked off three months of strong hiring.[...]
Some economists believe that some of October’s gain came as the government finally got a more accurate picture of the impact that three major hurricanes had in September.
“I think this report clearly shows that we got a hurricane bounce back,” said Anthony Chan, senior economist for J.P. Morgan Fleming Asset Management. “It also puts the possibility of a Fed rate hike in December back in play.”
While economists and investors have agreed the Fed will probably raise rates another quarter percentage point at its Nov. 10 meeting, many expected the central bank to pause, and hold rates steady, at its December policy meeting.
After Friday’s strong jobs number, that is far less certain.
In other words, things are swell, TYVM.
The next four years are going to be boom times, much like during Reagan’s second term. Reagan also had a nasty recession during his first term, but won re-election anyway, and the economy did wonderful things during his second term.
I fully expect the same result from Bush’s second term.