– by New Deal democrat
As common, I’ll take a fast take a look at this morning’s headline GDP numbers for Q3 earlier than passing on to my extra essential deal with the discharge’s main elements.
Actual GDP grew at a 2.8% annualized price in Q3. Similar to Q2, this can be a completely good quantity in step with the previous three years:
Stripping out inventories in addition to imports and exports offers us actual ultimate gross sales to home purchasers, which grew 0.9% for the quarter or 3.8% annualized, additionally very wholesome:
And the GDP deflator elevated 0.4%, or at an annualized price of 1.8%. It is a completely benign price going again to the beginning of the Millennium:
Whereas the coincident headlines had been all superb, extra importantly going ahead, for the second quarter in a row, each of the lengthy main indicators contained throughout the GDP report declined.
First, non-public mounted residential funding as a share of GDP, a proxy for the housing market, declined each in nominal (blue, -1.8% q/q) and actual (purple, -2.0% q/q) comparisons:
This housing measure is again down simply above its H1 2023 lows. Whereas this doesn’t scream recession, each the commonly flat pattern of the previous a number of years (with the availability chain tailwind now gone) and the again to again slight declines for 2 quarters in a row point out a slight drag on the economic system going ahead.
Secondly, whereas nominally proprietor’s earnings, a proxy for company income (which received’t be reported for one more month), rose by 0.6%. After making use of the GDP deflator, which got here in at 0.4%, actual proprietor’s earnings rose solely 0.2%:
This isn’t unfavorable, but it surely actually is mediocre.
In abstract, one of many two lengthy main indicators is unfavorable for the financial outlook for 2025, whereas the opposite is impartial.
Continued resilient actual shopper earnings and spending is preserving the economic system rising within the current and brief time period future, however a number of quarters out the 2 lengthy main elements not in keeping with any strong progress.
Due to the distinctive affect of the un-kinking of the availability chain points in 2022 into early 2023, I haven’t comprehensively up to date my take a look at lengthy main indicators in fairly some time. It appears like time to restart.
A historic take a look at labor drive participation surges, actual GDP, and unemployment – Offended Bear by New Deal democrat
