US Economic Update – US GDP Q3 2013

US GDP rose by 2.8% (annualized rate) in the September quarter, continuing the improvement experienced over the course of the past year. However, the stronger growth largely reflected a pickup in inventories. Business investment and consumption were weak, but housing is still growing

By

  • US GDP rose by 2.8% (annualized rate) in the September quarter, continuing the improvement experienced over the course of the past year.
  • However, the stronger growth largely reflected a pickup in inventories. Business investment and consumption were weak, but housing is still growing strongly while net exports turned positive.
  • We expect GDP will grow by 1.7% in 2013 (previously 1.6%) and 2.6% (previously 2.7%) in 2014. The revisions largely reflect a change in the timing of activity due to the stock-cycle.

US GDP in the September quarter grew by 0.7% qoq or at an annualised rate of 2.8%. Since the almost zero growth in the December quarter 2012, GDP growth has strengthened in each quarter. However, this strengthening has not been as strong as it appears as it reflects a build up in inventories which are not a sustainable source of growth; final sales of domestic product (GDP ex inventories) grew by 0.5%, unchanged from the June quarter. That is not to say that the improvement in GDP is illusory; part of the inventory increase has been in the farm sector and reflects an improvement in conditions from the severe drought experienced last year.

For further analysis download the full report.