FXStreet (Córdoba) – Anika Khan, Senior Economist at Wells Fargo bank explains that the slower pace of economic growth recorded during the third quarter in the US was due to a large detraction in inventories while on the positive side noted that the details of report were more promising.
Key Quotes:
“Real GDP rose at a 1.5 percent annual pace in the third quarter following a 3.9 percent rate in the second quarter. At first blush, the slower pace is disconcerting especially given the Federal Reserve will carefully weigh every data point until the December FOMC meeting.”
“Much of the slower pace in real GDP growth was due to the volatile inventory component. Inventories shaved an eye-popping 1.44 percentage points from the headline, which is the largest detraction since late 2012. The swing in inventories is not all that surprising given the sharp accumulation that occurred in the first half of the year.”
“There is some positive news in the report. Real private final sales to domestic purchasers, which excludes inventories and trade, rose to a 3.2 percent pace following a 3.9 percent increase in the second quarter. On the back of improving labor market conditions and stronger purchasing power due to the decline in retail gasoline prices, consumer spending has been a bright spot.”
“Residential investment continues to boost overall economic activity. The pickup in household formations since the beginning of the year will continue to support the housing market recovery.”
(Market News Provided by FXstreet)