Real GDP grew 3.5 percent in the third quarter, its fastest pace in two years. The Bureau of Economic Analysis provided more detail about growth by industry. In short, real value-added output in the manufacturing sector increased by 2.5 percent in the third quarter, its strongest rate since the first quarter of 2015. Real value-added from durable goods firms rose 5.1 percent but fell by 0.4 percent for nondurable goods businesses. As a result, manufacturers contributed 0.30 percentage points to headline growth in the third quarter, up from 0.09 percent in the second quarter but still rather subpar. Read More
The Bureau of Economic Analysis said that strong consumer spending helped push real GDP growth higher, with real GDP growth revised up to 3.2 percent in the third quarter. It was originally estimated to be 2.9 percent growth, and both figures were the fastest quarterly growth rate in two years. Overall, this report was good news. With the U.S. economy expanding by only 1.1 percent at the annual rate in the first half of 2016, the third quarter numbers were entirely welcome, especially for consumer spending and net exports. Business investment remains a concern, but hopefully recovers moving forward with improvement confidence. In the end, real GDP will grow by 1.6 percent in 2016, but I expect stronger activity next year, with the current forecast being 2.5 percent growth. Read More
Real GDP grew 2.9 percent in the third quarter, accelerating from the 1.4 percent increase seen in the second quarter. The Bureau of Economic Analysis provided more detail about second quarter growth by industry. In short, real value-added output in the manufacturing sector increased by 0.8 percent in the second quarter, extending the 0.5 percent contribution experienced in the first quarter. Real value-added from durable and nondurable goods firms rose 0.3 percent and 1.3 percent at the annual rate, respectively. As a result, manufacturers contributed 0.09 percentage points to headline growth in the second quarter, up from 0.06 percent in the first quarter but still rather subpar.
The largest contributors to real GDP in the second quarter were professional and business services (0.44 percent), transportation and warehousing (0.40 percent), educational services, health care and social assistance (0.30 percent) and finance, insurance, real estate, rental and leasing (0.20 percent). In contrast, significant drags to growth came from mining (-0.31 percent), retail trade (-0.17 percent) and construction (-0.16 percent) in the second quarter. Read More
The Bureau of Economic Analysis said that the U.S. economy grew 2.9 percent at the annual rate in the third quarter, up from 1.4 percent in the second quarter and its fastest pace in two years. Consumer spending, net exports and inventory spending were the bright spots in the latest report, with fixed investment data remaining soft. Still, even with the stronger results in the third quarter, which were mostly in-line with consensus estimates, real GDP has increased just 1.5 percent year-over-year. Indeed, the economy notched just 1.1 percent growth at the annual rate in the first half of 2016, with 1.6 percent growth expected for the year as a whole. With that in mind, manufacturers continue to call for pro-growth policies that will spur healthier gains in economic growth and higher levels of demand and production moving forward. That is particularly true with the election just 11 days away.
Nonetheless, stronger real GDP growth in the third quarter will help make the case to the Federal Reserve for a short-term rate hike later this year. I continue to expect the Federal Open Market Committee to raise rates at its December meeting, with two increases expected for 2017. Read More
The U.S. economy grew 1.4 percent at the annual rate in the second quarter, up from 1.1 percent in the prior estimate, according to the latest revision from the Bureau of Economic Analysis. The revision stemmed largely from better data for nonresidential fixed investment, up an annualized 1.0 percent for the quarter instead of a decline of 0.9 percent as noted in the previous release. With that said, there were still challenges related to nonresidential fixed investment, with businesses spending less for both structures (down 2.1 percent) and equipment (down 2.9 percent). In addition, there were large drags on headline growth from private inventories and residential activity, with the latter softer-than-desired after being a bright spot over much of the past two years. Gross private fixed investment alone subtracted 1.34 percentage points from real GDP growth in the second quarter. Read More
The latest gross domestic product (GDP) numbers confirm that the U.S. economy remains mired in slower-than-desired growth despite recent signs of progress in some data points. Real GDP grew just 1.2 percent in the second quarter, well below the consensus estimate of 2.6 percent, with first quarter growth revised down to 0.8 percent. This release reflects a rebound in consumer spending, but there were significant drags on activity from fixed investment and inventories. Indeed, manufacturers and other business leaders continue to be quite cautious, and as a result, they are holding back on capital spending and hiring, waiting for better signs of traction in the economy.
The U.S. economy has averaged 2.2 percent growth annually since the end of the Great Recession, and with this release, real GDP is likely to expand by 1.8 percent in 2016. That would, however, suggest a better second half of the year, as real GDP grew just 1.0 percent at the annual rate in the first half. With that in mind, we need policymakers – especially in this all-important election year – to focus on pro-growth measures that will spur stronger activity. Read More
The Bureau of Economic Analysis said that real GDP grew by 1.1 percent in the first quarter, improving from the prior estimate of 0.8 percent. The revision included better data on nonresidential fixed investment and exports that previously reported, but it also found that consumer spending on services did not grow as fast as once thought either. Nonetheless, the bottom line was largely the same. The U.S. economy experienced relatively sluggish growth in the first quarter thanks to stagnant spending on consumer goods, declining business investment and still-soft export growth, even with improvements in this latest report. Read More
The Bureau of Economic Analysis said that the U.S. economy grew by 0.8 percent in the first quarter of 2016, up from the prior estimate of 0.5 percent. The revision stemmed from better fixed investment, inventories and net exports data. Nonetheless, it is clear that the economy remained challenged, with the improvements in these categories reducing the pace to which each was a drag on real GDP growth. Overall, U.S. economic growth has been disappointing through the first three months of 2016, extending the sluggishness seen at the end of 2015. Indeed, the underlying story remained the same as noted in the prior release. Consumers and businesses were cautious in the first quarter, dampening real GDP growth, and the strong U.S. dollar and struggling economies abroad meant that net exports subtracted from growth in the quarter.
We have become accustomed to having a bad first quarter following by a strong rebound in the second quarter. In 2015, for instance, first and second quarter real GDP growth was 0.6 percent and 3.9 percent, respectively. I continue to expect a rebound in the current quarter, as well, with my forecast for second quarter 2016 growth currently at 2.5 percent. For 2016 as a whole, I am predicting 2.0 percent growth. Read More
The Bureau of Economic Analysis said that the U.S. economy grew just 0.5 percent in the first quarter of 2016, signifying a sluggish start to the year. This was slightly below the consensus estimate of real GDP growth of 0.7 percent, and it was down from 1.4 percent growth in the fourth quarter of 2015. In many ways, the data for the first quarter mirrored the trends seen in the prior report, with drags on growth coming from fixed business investment and net exports. Consumer spending on goods was the difference-maker in this release. While personal consumption continued to be one of the brighter spots, adding 1.27 percentage points to headline GDP growth, that increase stemmed almost entirely from spending on services. The gain from goods spending was negligible – adding just 0.03 percentage points. This finding is consistent with the disappointing retail sales numbers observed year-to-date, particularly for durable goods, and it was another sign that Americans have pulled back on their purchases as a result of anxieties in the economic outlook. Read More
The Bureau of Economic Analysis said that real GDP growth grew 1.4 percent at the annual rate in the fourth quarter. This was higher than the prior estimates of 0.7 percent and 1.0 percent. This latest revision reflected improvements in spending on services and growth in exports, but inventory spending was slower than in the most recent data release. Here are some trends in the data of note:
- Personal consumption expenditures added 1.66 percentage points to real GDP growth in the fourth quarter, increasing 2.4 percent at the annual rate. The bulk of that contribution came from services, which added 1.30 percent to the headline figure, especially from spending on food services, health care and recreation. In contrast, spending on durable and nondurable goods eased from growth rates seen in the third quarter, suggesting that consumers were holding back in the fourth quarter from making larger purchases.
- Businesses were also holding back on capital spending. Nonresidential fixed investment subtracted 0.27 percentage points from real GDP in the fourth quarter, with decreased spending on equipment, intellectual property products and structures. Slower inventory spending was also a factor, subtracting 0.22 percentage points. In contrast, residential investment rose by an annualized 10.1 percent in the fourth quarter on strength in the housing market, adding 0.33 percentage points. As a whole, gross private domestic investment served as a drag on real GDP growth, reducing the headline figure by 0.16 percentage points.
- Net exports were also a drag on growth, subtracting 0.14 percentage points from real GDP in the quarter. Goods exports declined by 5.4 percent at the annual rate in this report; whereas, goods imports were off by 1.3 percent. These data illustrate the significant headwinds faced by manufacturers from the strong dollar and sluggish economic growth in key markets. Indeed, U.S.-manufactured goods exports fell 6.1 percent last year.
Overall, demand and output remain significantly challenged in the manufacturing sector, and business leaders remain nervous in their economic outlook. The current expectation is for real GDP to increase by 2.1 percent in 2016, with manufacturing production up 1.5 percent.