3rd Quarter GDP Solid In Second Estimate

Third-quarter GDP proved even more solid than the first estimate, revised 3 tenths higher in the second estimate to an as-expected 3.3 percent annualized rate. Nonresidential investment and inventory growth added a little more in the second estimate while residential investment and net exports subtracted a little less. These offset a slightly smaller contribution from consumer spending, at a 2.3 percent rate vs 2.4 percent in the first estimate and expectations for 2.5 percent. The drop off on the consumer side was centered in durables which, despite a slight downgrade, still grew at an 8.1 percent rate getting a boost from hurricane-replacement demand for autos.

Turning back to inventories, whether builds are actually positive or negative for the outlook are always difficult to assess, but given this year's general strength in consumer and business demand, the third-quarter build is probably a positive for the outlook, suggesting that businesses were stocking up for strength ahead including for the holiday shopping season.

Consumer spending, despite auto sales, wasn't on fire in the third quarter though the outlook for the fourth quarter, given what are very high expectations for holiday spending, are positive. Early expectations for fourth-quarter GDP are once again in the 3 percent range.

Recent History Of This Indicator:
The second estimate for third-quarter GDP is expected to come in at a 3.3 percent annualized rate vs 3.0 percent in the first estimate. Consumer spending is one of the expected pluses, seen at 2.5 percent vs the first estimate's 2.4 percent. The GDP price index is expected to remain unchanged at 2.2 percent.