Q3 Real GDP rose by 2%, right in line with expectations but Nominal GDP was better than expected, rising 4.3% vs the estimated gain of 3.8%, the difference being the inflation price deflator which rose 2.3%. Personal Spending, 70% of the figure, rose by 2.6%, .1% better than expected and the best gain since Q4 ’06. It added 1.8 % pts to GDP. Spending on equipment and software rose 12% after a 24.8% gain in Q2. Residential construction fell by 29.1%. Trade reduced GDP by 2 full % pts as imports rose by 17.4% while exports were up by just 5%. The inventory gain of $115.5b added 1.4% to GDP. Government spending was up 3.4% solely led by the Federal side. Real Final Sales, taking out the inventory influence, rose by .6%, the slowest since Q3 ’09. Bottom line, growth was ordinary in Q3 after an ordinary growth rate of 1.7% in Q2 and unfortunately is not expected to get much better in Q4. The economy is still growing but below its potential.

Category: MacroNotes

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