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USA: GDP grows, but less than expected. Consumption is driving, both private and public (Defense)

The US economy expanded 2.8% year-over-year in 3Q 2024, below 3% in 2Q 2024 and the 3% forecast, according to the BEA's advance estimate. A good GDP result , all things considered.

Personal spending increased at the fastest pace since Q1 2023 (3.7% vs. 2.8% in Q2), supported by a 6% surge in consumption of goods (6% vs. 3%) and by robust spending on services (2.6% versus 2.7%), especially prescription drugs, motor vehicles and spare parts, outpatient services and food and accommodation services.

Public consumption also increased more (5% vs 3.1%), led by defense spending. Furthermore, the contribution of net trade was less negative (-0.56 percentage points against -0.9 percentage points), with a surge in both exports (8.9% against 1%) and imports (11, 2% versus 7.6%), driven by capital goods, excluding cars.

On the other hand, private stocks trailed growth by 0.17 percentage points, after adding 1.05 percentage points in the second quarter. Fixed investments also slowed down (1.3% versus 2.3%) , led by a decline in structures (-4% versus 0.2%) and residential investments (-5.1% versus -2.8%). ). Investments in equipment, however, recorded a surge (11.1% vs 9.8%).

Let's look at the relevant graph:

Markets reacted little to the data, while stock market futures pointed to an uncertain open. Government bonds also had no particular changes. Earlier in the morning, payroll processing firm ADP reported that private sector job growth rose by 233,000 in October, well above expectations. Also today the markets were distracted by a lot of Q3 earnings announcements, and some of them were very good.

“We have a perfect combination of strong growth and slowing inflation. What more could you want?” said Dan North, senior economist at Allianz Trade North America. “But many people wish they had experienced a less inflationary period, which is hurting them anyway. That's why they think the economy is still rotten."

The GDP release comes as the Federal Reserve is poised to further reduce interest rates despite the seemingly strong economy and inflation that remains above target, albeit far from the peak reached in mid-2022. If indeed continues to lower rates, we could see a greater stimulus to the economy, especially in the real estate sector.m


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The article USA: GDP grows, but less than expected. They drive consumption, private and public (Defense) comes from Economic Scenarios .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/usa-il-pil-cresce-ma-meno-delle-attese-tirano-i-consumi-privati-e-pubblici-difesa/ on Thu, 31 Oct 2024 08:00:00 +0000.