US economic growth in the third quarter seems to have been better than first thought. According to US Bureau of Economic Analysis “second estimate” figures released this week, Q3 GDP growth was 3.2% annualised, up from the advance estimate of 2.9%. The higher number was the result of higher consumer spending and higher investment in housing and lower business investment. The latest estimate is also well up on the second quarter comparable figure of 1.4% and therefore it is likely to cement the market’s expectation of a 25bps rate rise at the next US Fed meeting in early December.
NAB interpreted the figures as suggesting US consumers remain untroubled. Consumption accounts for roughly two thirds of GDP in advanced economies and thus it is the major determinant of economic growth.