Global| Oct 27 2017U.S. GDP Growth Remains Firm in Q3, Despite Storm Effects
by:Tom Moeller
|in:Economy in Brief
Summary
Economic growth of 3.0% (2.3% y/y) during Q3'17 roughly matched growth during Q2. Together, these were the firmest quarters since the middle of 2014. The latest figure surpassed expectations for a 2.6% rise in the Action Economics [...]
Economic growth of 3.0% (2.3% y/y) during Q3'17 roughly matched growth during Q2. Together, these were the firmest quarters since the middle of 2014. The latest figure surpassed expectations for a 2.6% rise in the Action Economics Forecast Survey. The Commerce Department indicated that Hurricane Harvey reduced oil & gas output, while Hurricane Irma lessened agriculture production.
The change in business inventories added 0.7 percentage points to growth last quarter following a one-tenth of a percentage point Q2 addition. Improvement in net exports added a 0.4 percentage point to growth, the most in a year. Exports grew 2.3% (2.3% y/y), the weakest advance in three quarters. Imports fell 0.8% (+3.2% y/y), the first decline since Q1'16.
Domestic final sales growth of 1.8% (2.3% y/y) was the weakest advance since Q1'16 as it decelerated from 2.7% in Q2. Consumer spending growth slowed to 2.4% (2.6% y/y) from 3.3% as nondurable goods consumption halved to 2.1% (2.5% y/y). Gasoline & fuel oil consumption declined 4.8% (-1.3% y/y) while clothing purchases fell 0.5% (+1.6% y/y. Durable goods consumption growth quickened to 8.3% (6.2% y/y) as motor vehicle buying strengthened 14.7% (4.3% y/y). Spending on home furnishings and appliances advanced 7.4% (6.6% y/y), but recreational goods purchases eased 0.2% (+8.5 y/y) following three straight quarters of double-digit growth. Services spending grew 1.5% (2.1% y/y), the weakest quarterly gain in four years. Housing utilities spending gained 0.2% (0.6% y/y) after a 3.4% rise. Recreation spending strengthened 3.7% (3.0% y/y) while restaurant & hotel expenditures rose 2.8% (1.2% y/y).
Business fixed investment grew 3.9% (4.4% y/y). Three-quarter growth averaging 5.9% was the quickest in three years and up from a 0.6% decline last year. Equipment spending grew a steady 8.6% (5.9% y/y) as investment in information processing equipment jumped 12.9% (8.6% y/y). Industrial equipment investment grew 5.6% (7.6% y/y) and intellectual property product investment improved 4.3% (3.3% y/y). Structures investment fell 5.2% (+3.3% y/y) after a 7.0% rise.
Residential investment fell 6.0% following a 7.3% decline. Year-to-year growth of 0.9% was down from the peak 13.5% advance during all of 2012.
Government sector spending eased 0.1% (-0.2% y/y), off for the third straight quarter. State & local government spending fell 0.9% (-0.3% y/y) following a 1.5% decline. Federal government investment increased 1.2% after a 1.9% Q2 gain, but it was unchanged y/y. Defense spending grew 2.3% (0.1% y/y) after a 4.7% rise. Nondefense spending eased 0.5% (-0.0% y/y), off for the third straight quarter.
The GDP price index strengthened 2.2% (1.8% y/y), the quickest increase in five quarters. The gain was led by a 5.1% increase (4.0% y/y) in the residential investment price index. The government consumption price index rose 2.5% both q/q and y/y. The personal consumption price index gained 1.5% (1.5% y/y), up from the 0.3% Q2 increase and the business fixed investment price index rose 1.3% (1.3% y/y).
The GDP figures can be found in Haver's USECON and USNA database. USNA contains virtually all of the Bureau of Economic Analysis' detail in the national accounts, including the integrated economic accounts and the recently added GDP data for U.S. Territories. The Action Economics consensus estimates can be found in AS1REPNA.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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