Growth, inflation and labour market all easing
US GDP rose by a reasonably strong 3.2% (annualized rate) in Q4, completing a strong second half to the year. Consumption growth was stronger as were net exports but residential investment went into reverse and public demand was very weak due to the October government shutdown.
US GDP in the September quarter grew by a reasonably strong 0.8% qoq or at an annualised rate of 3.2%. While this represents a deceleration from the strong September quarter pace, the growth over the six month period was the fastest half-yearly growth rate in almost two years.
One factor boosting GDP growth in the last two quarters has been rapid inventory accumulation which is not sustainable. However, looking at final sales of domestic product (which excludes inventories) the picture is of a strengthening economy. Moreover, the stronger December quarter outcome came despite the partial Government shutdown in October, which contributed to a large reduction in public spending.
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