Key highlights:

• GDP growth was very strong in Q3, at 4.9% q/q (annualised). The main drivers were consumer and government spending, and inventories. However, business investment stalled.
• At the same time quarterly core inflation in Q3 declined to its lowest level since 2020, although monthly indicators have recently lost some of their downwards momentum.
• With the Q3 outcome higher than expected, we now forecast GDP growth of 2.4% in 2023 (was 2.3%) and 1.4% in 2024 (was 1.2%). These forecasts still incorporate the view that growth will slow starting in Q4 2023.
• The Fed left policy unchanged this month and our baseline view remains that the fed funds rate has peaked, although there remains upside risk.

Find out more in NAB’s US Economic Update (3 November 2023)