Note: This post is an excerpt from Gould Asset Management’s Economic and Market Review for the Third Quarter of 2017. The excerpt is posted here for the benefit of our blog subscribers.
US Economy Marches Forward at Measured Pace; Hurricanes’ Impact Felt
Q2 GDP rebounded after a relatively weak first quarter. Second quarter readings came in at a 3.1% annualized rate, driven by strong consumer spending. Although Hurricanes Harvey and Irma will impact third quarter growth, reconstruction activity and federal hurricane relief efforts should help boost the economy next quarter.
Showing its first signs of life in several months, core inflation ticked up 0.2% in August, which may soothe some concerns of a broad slowing. It will take more readings, however, to determine if the pickup can be sustained.
Consumer confidence fell in the wake of the Texas and Florida hurricanes, but remained relatively high at 119.8 in September. The labor market was a bright spot, with fewer saying jobs are hard to get.
The headline unemployment rate fell to 4.2% in September despite the first decline in nonfarm payrolls in seven years, a dip largely attributed to hurricane effects. Wage growth, which had been stagnant much of this year, spiked 0.5% last month, another sign of a tightening job market.
The housing sector had trouble building momentum going into year-end, and Harvey and Irma dampened the outlook further. Going into the fourth quarter, it seems unlikely housing will be a significant near-term contributor to economic growth.
In early September, Congress reached a deal to raise the debt ceiling and extend government funding for three months. Next on the agenda is a tax reform bill; passage is highly uncertain, and views on its likely economic impact vary widely. Read the rest of this entry »