The Bureau of Economic Analysis reports that the U.S. economy grew by 3.2 percent in the third quarter. The bottom line is that the U.S. economy has expanded for two straight quarters by at least 3 percent, and if the current forecast holds, that streak should extend to three consecutive quarters.
The current forecast is for 3.5 percent real GDP growth in the fourth quarter, with 2.3 percent growth in the U.S. economy for 2017 as a whole. This is a slight improvement from the 2.1 percent average growth rate seen since the Great Recession. The National Association of Manufacturing is estimating a 2.8 percent growth for 2018. With the passage of comprehensive tax reform and other pro-growth policies, there is upward potential in the outlook for next year, especially as firms increase their investments.
Consumers continue to be one of the bright spots in the economy. Americans have accelerated their purchasing, which boosted overall holiday sales. Personal spending was up strongly in November, up 0.6 percent, with 4.5 percent growth over the past 12 months. In November, nondurable goods spending rebounded, up 1.2 percent, with durable goods purchases unchanged in the latest data. Goods spending for durable and nondurable goods were up 5.4 percent and 5.0 percent year-over-year, respectively. As a result of the latest uptick in spending, the savings rate has fallen to a 10-year low, down from 3.2 percent in October to 2.9 percent in November. Moreover, the University of Michigan and Thomson Reuters reported that consumer confidence pulled back for the second straight month. Yet, Americans remain mostly upbeat in their outlook overall, especially relative to their sentiment one year ago.
Meanwhile, the data on manufacturing activity remained encouraging. Personal incomes were up 0.3 percent in November, with 3.8 percent growth over the past 12 months. In addition, manufacturing wages and salaries have risen 4.3 percent year-over-year, totaling $841.1 billion in November. At the same time, new durable goods orders were up 1.3 percent in November. The increase in the latest data stemmed largely from strong transportation equipment sales, including healthy growth for motor vehicles and parts and defense and nondefense aircraft and parts. Excluding transportation equipment, new durable goods orders edged down by 0.1 percent in November, its first decline in five months. New durable goods orders have generally trended in the right direction over the course of the past 12 months. In fact, new durable goods orders have jumped 8.2 percent since November 2016.