Thursday, October 29, 2015

US Economic Growth (Q3'2015)

US real GDP grew at a 1.5 per cent annual rate in the third quarter, well below most economists expectations. Growth was pulled lower by exports while private domestic demand, which includes personal consumption and business investment, rose at a relatively robust 3.2 per cent . Importantly, this is a preliminary release for US real GDP and will be revised in subsequent months. Second quarter GDP was revised from an initial 2.5 per cent up to 3.9 per cent. 

Today's disappointing economic growth numbers should temper expectations for a December rate hike by the US Federal Reserve. If the Fed does indeed decide to tighten monetary policy at its final meeting in 2015, it is increasingly unlikely that that decision will be supported by trends in growth and inflation, but rather by a long-held desire to move rates off of the zero lower bound.

Copyright BCREA - reprinted with permission 

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