What’s Behind U.S. GDP Strength? - InvestingChannel

What’s Behind U.S. GDP Strength?

Behind a blistering hot Q3 GDP were warning signs of a slowing American consumer. American spending helped shoot gross domestic product for the months of July, August and September a better-than-expected 4.9 percent. Increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment drove spending, partially offsetting a decrease in nonresidential fixed investment.

At the same time, Americans saved less and incomes fell. Disposable personal income increased 1.9 percent, in the third quarter, compared with an increase of 6.1 percent, in the second quarter. Personal savings dwindled to $776.9 billion in the third quarter from $1.04 trillion in the second quarter. The consumer spending spree, largely due to excess savings from the pandemic, went on despite inflation and higher interest rates, however, most experts don’t believe it can continue.

Gross domestic product measures the monetary value of final goods and services—those bought by the final user—produced in a country in a given period of time. It counts all of the output generated within the borders of a country and, in the United States, is released quarterly. The advance estimate comes out within thirty days and is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the third quarter, based on more complete data, will be released on November 29, 2023. The print will be assessed in the upcoming FOMC meeting, however, most traders do not think the higher-than-expected data will sway the Fed’s current plans for an interest rate pause.

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