5 Things to Watch in the Third-Quarter GDP Report from the WSJ Eric Morath 10/28/16
5 Things to Watch in the Third-Quarter GDP Report from the WSJ Eric Morath 10/28/16
U.S. economic growth appears to have accelerated in the third quarter after nine straight months of subpar gains, even for the lackluster expansion. Gross domestic product, a broad measure of economic output, is projected to have advanced at a 2.5% annualized pace this summer, according to economists surveyed by The Wall Street Journal. The economy grew at a 1.4% rate in the second quarter. Here’s what to watch in Friday’s GDP report from the Commerce Department.
1 Long-Awaited Breakout?
The economy has grown at less than a 2% rate since the third quarter of 2015. That’s weaker than the average gain during the current expansion, which itself features the slowest annual advance of any growth period since at least 1949. Economists predict an acceleration, with some expecting the quarterly rate to touch 3% for the first time in two years. But keep in mind, economists projected a similar breakout in the second quarter, and it didn’t materialize in the data.
2 Consumer Spending
Growth in consumer spending essentially kept the U.S. economy from contracting during the first half of the year. Check to see if that burden became heavier in the third quarter. Economists expect consumer spending still contributed to overall output gains, but at a slower pace.
1. Business Spending
Business spending on intellectual property, such as software and research and development, rose at the fastest pace in nearly a decade in the second quarter. That gain helped mask sluggish investment in equipment and structures. If the fading drag from the energy bust allows firms to spend more across the board, that could support an acceleration in growth.
4 Inventory Turn
The change in private inventories has been a drag on economic growth for five straight quarters. If growth did accelerate in the third quarter, that trend likely turned around. Solid consumer demand so far this year likely allowed businesses to pare down stockpiles.
5 Government Pullback
A sharp pullback in spending among state and local governments was another drag on output gains in the second quarter. And more recent data suggests the drag persisted into the third quarter. Construction spending by state and local governments fell in August to its lowest level since March 2014.
U.S. economic growth appears to have accelerated in the third quarter after nine straight months of subpar gains, even for the lackluster expansion. Gross domestic product, a broad measure of economic output, is projected to have advanced at a 2.5% annualized pace this summer, according to economists surveyed by The Wall Street Journal. The economy grew at a 1.4% rate in the second quarter. Here’s what to watch in Friday’s GDP report from the Commerce Department.
1 Long-Awaited Breakout?
The economy has grown at less than a 2% rate since the third quarter of 2015. That’s weaker than the average gain during the current expansion, which itself features the slowest annual advance of any growth period since at least 1949. Economists predict an acceleration, with some expecting the quarterly rate to touch 3% for the first time in two years. But keep in mind, economists projected a similar breakout in the second quarter, and it didn’t materialize in the data.
2 Consumer Spending
Growth in consumer spending essentially kept the U.S. economy from contracting during the first half of the year. Check to see if that burden became heavier in the third quarter. Economists expect consumer spending still contributed to overall output gains, but at a slower pace.
1. Business Spending
Business spending on intellectual property, such as software and research and development, rose at the fastest pace in nearly a decade in the second quarter. That gain helped mask sluggish investment in equipment and structures. If the fading drag from the energy bust allows firms to spend more across the board, that could support an acceleration in growth.
4 Inventory Turn
The change in private inventories has been a drag on economic growth for five straight quarters. If growth did accelerate in the third quarter, that trend likely turned around. Solid consumer demand so far this year likely allowed businesses to pare down stockpiles.
5 Government Pullback
A sharp pullback in spending among state and local governments was another drag on output gains in the second quarter. And more recent data suggests the drag persisted into the third quarter. Construction spending by state and local governments fell in August to its lowest level since March 2014.
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