Quiver Quantitative - In the latest economic update, the U.S. economy demonstrated stronger-than-expected growth in the third quarter, surpassing initial estimates. Revised data revealed a robust 5.2% annualized expansion, marking the quickest pace in almost two years. This surge was underpinned by significant contributions from business investment and government spending. Notably, the upward revision in business investment was a standout, shifting from a decline to a gain, primarily driven by increased spending on structures. Housing sector performance also exceeded initial reports, further bolstering this period's economic strength.
Despite a slight downward adjustment, consumer spending continued to show resilience, growing at a solid 3.6%. This enduring vigor is largely attributed to the stable jobs market and a surge in activities like travel and events. However, there are signs of a slowdown as the year closes, with modest increases in inflation-adjusted outlays. In contrast, holiday shopping trends showed mixed results, with Cyber Monday hitting a record $12.4 billion in sales, up 9.6% from the previous year. Meanwhile, the Federal Reserve's preferred inflation measure, the personal consumption expenditures price index, was revised to a lower annual rate of 2.8% for the quarter, reflecting a slightly eased inflation pressure.
Corporate America also reported encouraging signs, with pretax profits seeing their largest rise in over a year, predominantly led by the non-financial sectors. Financial firms also reported profit increases. This growth resulted in after-tax profits accounting for 14.9% of gross value added for non-financial corporations, indicating a healthy profit margin landscape.
Amidst these positive indicators, some challenges persist, as data revealed the U.S. merchandise trade deficit widened to a three-month high in October. This mixed bag of economic signals offers a complex view of the current U.S. economic landscape as it navigates through varied internal and external pressures.
This article was originally published on Quiver Quantitative