3rd Q-US Economy

October 27, 2017

3rd Q-US Economy

US Economy Increases by 3% in 3rd Quarter

The third quarter GDP increase was envisioned to be 2.5%, but expectations were surprised to day when the Commerce Dept
announced the larger than expected increase.

Even after weathering 2 major hurricanes, which were expected to have an adverse impact on the economy, the USA managed to power through. Those hurricanes were a major factor in the US losing 33,000 jobs this September, which is the first time in seven years that there has been a fall in the number of jobs created.

The first preliminary estimates of the losses incurred by the hurricanes are in the region of $121 billion of private assets and $10 billion in government assets.

Apart from the obvious negative aspects of the hurricanes, there are positive implications too. The amount of cars, for instance, that were destroyed and have now been replaced, had a positive impact on car sales for the quarter.

GDP or gross domestic production is a pretty good indicator of how the economy is performing. The majority of it (70%) is composed of consumer spending, which just grew by 2.4% in the quarter, but the real growth which pushed the number higher was non residential fixed investment which is growing at 3.9%.

To explain this in everyday language, it really means that companies are investing in themselves which is a positive sign.
So all of this is expected to reinforce the expectation of the Fed increasing interest rates for the third time this year come December.
Since the great recession in 2007-8, the economy is now in its eighth year of recovery, being powered by a tightening labor market and shows no sign of easing off.

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~ by John Tomnay