3rd Quarter GDP
1.6%.
No, I don’t consider that acceptable, though I expect that final revisions will take it to about 2.0% by the time all is said and done, as that has roughly been the trend in most quarters during the past two years. I also see encouraging signs in capital investment that support the CW (conventional wisdom) that the fourth quarter will be stronger.
Looking through some of the components (all annualized; divide by 4 to get the rough actual change during the quarter):
- Personal consumption expenditures (+3.1%) — Not bad.
- Private domestic invesment (-2.0%) — the slowdown in housing construction (-17.4%) dragged the overall number into negative territory overshadowing very strong performances in nonresidential construction (+8.6%) and Equipment and software (+14.0). Corporate America has opened up the capital spending spigots in a big way for four quarters (finally), which bodes well for future growth.
- Government (+2.0%) — After big declines in the second quarter, that this one didn’t come in higher is a surprise.
The oil-price decline didn’t really start kicking in until about September 1, and the economy’s positive response to that won’t be seen until the fourth quarter — except, perhaps, in the revisions to the prelimary 3rd quarter results just released, which makes me feel more confident that those revisions will indeed be upward.
Given the second and third quarter results, the fourth quarter will definitely be put-up-or-shut-up time.
