Tags: economists | gdp | growth | forecast

Economists Slash GDP Estimates on Weak Consumer Spending

Image: Economists Slash GDP Estimates on Weak Consumer Spending
(Dollar Photo Club)

By    |   Thursday, 30 November 2017 03:09 PM

Economists slashed fourth quarter GDP growth tracking estimates by 0.3 percentage points, to a median of 2.4 percent, according to CNBC/Moody's Analytics Rapid Update.

October’s weak consumer spending data forced the move, CNBC explained.

Consumer spending slowed in October as the hurricane-related boost to motor vehicle purchases faded, but a sustained increase in underlying price pressures suggested that a recent disinflationary trend had probably run its course.

Other data on Thursday showed a second straight weekly drop in first-time applications for unemployment benefits, pointing to a further tightening in labor market conditions that could soon generate faster wage growth and drive inflation higher.

The reports strengthened expectations that the Federal Reserve will raise interest rates next month. The U.S. central bank has increased borrowing costs twice this year.

"The growth news in today's release was modestly disappointing: real consumer spending increased 0.1 percent in October, a bit shy of expectations, and September consumption growth was revised down a tenth to 0.5 percent. This leaves real annualized consumption growth in 4Q17 tracking around 2.5 percent, down from our prior estimate of 3.0 percent," CNBC cited JP Morgan chief U.S. economist Michael Feroli as writing.

The Commerce Department said consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.3 percent last month after surging 0.9 percent in September. Spending in September recorded its largest gain since August 2009 and was buoyed by some drivers in Texas and Florida replacing automobiles destroyed when Hurricanes Harvey and Irma slammed the states in late August and early September.

Last month’s increase in consumer spending was in line with economists’ expectations. Spending on long-lasting goods like autos fell 0.1 percent last month after surging 2.9 percent in September. Spending on nondurable goods such as prescription drugs and recreational items rose 0.2 percent.

Outlays on services increased 0.3 percent amid a rise in airline tickets for foreign travel and communication services.

Though overall inflation subsided as disruptions to the supply chain following the hurricanes eased, underlying price pressures increased again at a steady clip in October.

Meanwhile the Atlanta Fed also lowered its growth forecast.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2017 is 2.7 percent on November 30, down from 3.4 percent on November 22. 

© 2018 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Economists slashed fourth quarter GDP growth tracking estimates by 0.3 percentage points, to a median of 2.4 percent, according to CNBC/Moody's Analytics Rapid Update.
economists, gdp, growth, forecast
383
2017-09-30
Thursday, 30 November 2017 03:09 PM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved