GDP: 3Q Ends Strong
December 22, 2016
Bottom Line: Economic activity was stronger in 2016 Q3-16 from previous reports. Because this revision was largely due to new December data, this suggests that the quarter ended strong. Business and residential investment drove the stronger revisions. Economic activity is now a modest 1.7% above its year ago level and 11.5% above its previous peak level in 2007 Q4. 2016 Q4 is nearly over and the data released so far for October, November and early December suggest that 2016 Q4 economic activity grew at a modestly slower pace than in Q3-16; many early estimates are between 2.0% to 2.5%.
GDP was REVISED HIGHER by 0.3 percentage points to 3.5% in this third estimate for 2016 3rd Quarter. This compared with market expectations for an upward revision to 3.3%. Economic activity is now 1.7% above its year ago level.
In final sales categories, fixed investment, government purchases, residential investment, consumption, and imports were revised higher while net exports were revised lower.
As a result of all of these changes, real final sales was revised up by 0.4 percentage points to 3.0% while real domestic demand was revised up by 0.4 percentage points to 2.1%.
The GDP Price Index was REVISED UP by 0.01 points to 1.5%, compared with market expectations no change at 1.4%. Economy-wide prices are now 1.3% ABOVE year ago levels. Economy-wide inflation hit a cyclical peak of 3.4%in 2006 Q2 and reached a cyclical nadir of 0.2% in 2009 Q3.
Article by Contingent Macro Advisors