The US economy grew at a slow pace of only 2% in Q3 according the first revision of GDP. The first release showed a growth rate of 2.5%. Early expectations stood on no change or a small downwards revision to 2.4%.
So, this is a significant disappointment that casts a shadow on all the world. The big questions remain about growth in Q4 in which we are now. There is a chance that Europe is already in recession.
There still is a final revision of the data scheduled. It’s also important to note that we might also see the final numbers revised, as it happened for Q1 – the figure was revised to the downside well into Q3.
Stall Speed and QE3
This kind of growth rate is almost a “stall pace” rate for jobs. There always is a gap between economic growth and the job market. A growth rate of 3.5% or higher would be much more favorable for the US economy and for the whole world.
Later today, the Federal Reserve will release the minutes from the last meeting. We will get to see how many members supported further easing steps. The last meeting didn’t yield any policy changes.
All in all, the market remains focused on Europe. The high funding costs of Spain and Italy are weighing heavily on the euro and other risk currencies as well.
For more on the euro, see the euro/dollar forecast.