US: Q3 GDP report is positive – NBF

Krishen Rangasamy, analyst at the National Bank of Canada,  points out that the US economy continues to boom after the release of US Q3 GDP data.  

Key Quotes:

“Real GDP grew 3.5% annualized in the third quarter according to the Bureau Economic Analysis’ advance estimate. The positive impact of fiscal stimulus is evidenced by sustained gains for domestic demand courtesy of government spending and consumption (via personal income tax cuts). True, not all was rosy in Q3, particularly the drag from trade which was the largest in 33 years.”

“Real final sales (i.e. GDP excluding inventories) grew at the slowest pace since 2016, but that came after a massive increase (highest in 12 years) the prior quarter. So, we’re not particularly concerned about this moderation.”

“Further increases in nominal GDP (+4.9% annualized) and the associated increase in tax revenues will be welcome by Washington which is struggling to rein in the budget deficit due to tax cuts.”

“The Q3 GDP report is positive, although the inventory build may somewhat limit production in the fourth quarter. We are keeping unchanged our forecast of 2.9% for 2018 real GDP growth. That’s the best annual performance of the U.S. economy since 2015, the last time we saw a similar surge in domestic demand.”