Today’s first reading showed that gross domestic product expanded at a better-than-expected 1.9% annualized rate in the third quarter. The gain mainly reflected strength in consumer spending, the biggest part of the economy, which increased at a 2.9% rate and exceeded projections for a 2.6% rise.
- U.S. real GDP increased by 1.9% q/q annualized in Q3 (BCM: 1.8%, consensus: 1.6%), slightly below its 2% increase in Q2, lowering its y/y change to 2.0% from 2.3%. Domestic demand moderated, with real final sales to domestic purchasers increasing by 2% q/q annualized in Q3, compared to the robust 3.6% q/q increase in Q2. The deceleration in U.S. economic growth this year reflects tariffs and trade-related uncertainties, slower global growth, the fading boost from the Tax Cuts and Jobs Act, and geopolitical risks.
- Healthy growth in real consumption (+2.9% q/q annualized), the first increase in residential fixed investment since Q4 2017 and solid growth in government purchases more than offset declines in business fixed investment (-3% q/q annualized), the widening trade deficit (-0.1pp), and inventory investment (-0.1pp) that subtracted from growth.
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