A Commerce Department’s release shows that gross domestic product, the monetary measure of the market value of all final goods and services produced in a quarterly period, expanded at a 3.2% annual rate. That is the strongest pace since the second quarter of 2014 and beat the consensus estimate of a 3.1% growth rate previously estimated among economists.
In addition consumer spending, which accounts for two-thirds of the economy, rose 2.8% in the quarter. That number was stronger than the original estimate of 2.1% and the strongest rate since 2002.
The consumer sector has been bolstering economic growth for several quarters now.
Another big contribution to the economy was business investment in structures like offices and factories, which expanded at a 10.1% pace. This too was faster than the initial estimate of 5.4%.
As would be expected, corporate profits soared 6.6% in the third quarter, a much better performance than the 0.6% decline in the previous quarter.
Residential investment, like housing starts, contracted 4.4% in the second revision which was better than the 6.2% decline initially reported.
Exports, which are at the strongest point in three years, were marked up slightly, to a 10.1% gain from 10.0%. Imports, which detract from overall GDP growth, were marked down slightly, to a 2.1% gain from 2.3%.
Economists were feeling good about the numbers reported by the Commerce department...
Stephen Stanley, chief economist for Amherst Pierpont Securities, in a research note stated...
“I was willing to entertain the possibility that as energy prices rose, real spending would moderate a tad. However, just when the data seemed to be pointing in that direction (with the 2.1% Q3 initial print), we learn that in actuality, spending increased at close to the 3% clip in the summer after all.”
With wages and salaries growing at an annual 6.7% pace, Stanley noted...
“the consumer is likely to continue to spend for the foreseeable future. The fundamentals for the household sector are as good as I’ve seen in quite some time.”
Regions’ Chief Economist Richard Moody wrote...
“As we see it, current quarter growth will have a familiar look to it, i.e., top-line growth not far from 2.0 percent and with consumers doing the heavy lifting. There are both upside and downside risks for growth in 2017 and 2018, but without a specific set of fiscal and regulatory proposals, it is simply too soon to fully assess the impacts on growth.”
Much like the economy George W. Bush inherited from Bill Clinton, Donald Trump is inheriting an economy that is chugging along rather nicely. Let's hope he doesn't do the same thing Bush did and kill this fledgling economy just as it's starting to take flight.