Thursday, November 30, 2017

A Solid GDP Report

The BEA released their latest estimate of 3Q GDP, which had a 2.3% Y/Y headline number percentage change.  The following table shows that gains were broad:

The pace of Y/Y growth is increasing: 

The following charts highlight several important aspects of the report:

Equipment investment (top chart) and, more specifically, industrial equipment investment (bottom chart) have increased for four and six quarters, respectively.

However, residential investment may be topping:

The top chart shows total residential investment while the bottom chart is residential construction.  Both have recently stalled.

            Consumers continue to spend at a consistent pace:

The top chart shows total PCEs, which have printed between 2.5%-3% for some time.  Durables goods spending (middle chart) ticked higher while non-durable goods spending (bottom chart) has improved solidly over the last few quarters.

There is very little to be concerned about in this report.