US Q3 GDP rise burnishes soft landing case
NEW YORK, Oct 27 (Reuters) – U.S. economic growth rebounded more than expected in the third quarter amid a continued decline in the trade deficit, but that overstates the economy ‘s health as the Federal Reserve’s aggressive interest rate increases curbed consumer spending .Gross domestic product increased at a 2.6% annualized rate last quarter , the Commerce Department said in its advance GDP estimate on Thursday, ending two straight quarterly decreases in output, which had raised concerns that the economy was in recession. Economists polled by Reuters had forecast GDP growth rebounding at a 2.4% rate.
BONDS: U.S. 10-year yields eased to 4.0424%; Two-year yields eased to 4.4290% after the release;
FOREX: Euro/dollar pared a loss and was off 0.58%
“GDP was a weak bounce from the negative prints in Q1 and Q2. Lots of negatives add up to a positive for the Fed, though. Weak spending and slower inflation are what they’ve been hoping for.”“What were seeing is an economy that has snapped back from two quarters of negative GDP , and it’s probably opened the debate as to whether or not the economy was in recession in the first two quarters of the year. Inflation has probably peaked and that’s key here.”“Does that change what the Fed’s going to do? It raises the possibility of one more rate hike in December and then a pause.”“Even though these numbers raise the debate over economy , (the drop in core capital goods) means less corporate spending ahead and that raises the prospects of negative growth in the first quarter of 2023.”“ Consumer spending was lower than what we’ve seen, it’s a good indication that higher interest rates are biting into the pocketbooks of the consumer.”“Continuing jobless claims points to a weakening labor market. That’s what the Fed wants to see. The Fed wants to see pain on Main Street.”
NEW YORK, Oct 27 (Reuters) – U.S. economic growth rebounded more than expected in the third quarter amid a continued decline in the trade deficit, but that overstates the economy’s health as the Federal Reserve’s aggressive interest rate increases curbed consumer spending.
Gross domestic product increased at a 2.6% annualized rate last quarter, the Commerce Department said in its advance GDP estimate on Thursday, ending two straight quarterly decreases in output, which had raised concerns that the economy was in recession. Weak spending and slower inflation are what they’ve been hoping for.”
“What were seeing is an economy that has snapped back from two quarters of negative GDP, and it’s probably opened the debate as to whether or not the economy was in recession in the first two quarters of the year. It raises the possibility of one more rate hike in December and then a pause.”
“Even though these numbers raise the debate over economy, (the drop in core capital goods) means less corporate spending ahead and that raises the prospects of negative growth in the first quarter of 2023.”
“Consumer spending was lower than what we’ve seen, it’s a good indication that higher interest rates are biting into the pocketbooks of the consumer.”
“Continuing jobless claims points to a weakening labor market.
