The US economy grew faster than expected in this year’s third quarter, according to this morning’s “advance” GDP estimate for the July-through-September period. Economic activity expanded 3.5% in Q3, the Bureau of Economic Analysis reports — comfortably above the consensus forecast’s 3.0% estimate, according to Econoday.com’s survey. Meanwhile, today’s weekly update on jobless claims continues to signal ongoing growth for the labor market. The numbers du jour aren’t terribly surprising if you’ve been following the macro updates recently, but the news is no less encouraging for anticipating that moderate growth for the US will persevere for the foreseeable future.
Although the pace of Q3 GDP decelerated from the 4.6% gain in the previous quarter, the solid back-to-back increases suggest that there’s a healthy tailwind blowing in the US. The latest run of weakness in Europe, it seems, has yet to make a dent in the American recovery. There may yet be new challenges ahead for the US economy, but the rear-view mirror implies that business-cycle risk remains quite low.
Adding to the bullish aura is the latest weekly release on new filings for jobless benefits. Although claims rose 3,000 to a seasonally adjusted 287,000 for the week through October 25, the latest uptick looks like noise from the perspective of the broad decline that’s been underway through most of 2014.
Notably, the four-week moving average for new claims is currently at a 14-year low. Meanwhile, the year-over-year trend continues to project a bullish profile in no uncertain terms. Claims dropped a healthy 17% last week vs. the year-earlier level. It all adds up to a positive signal for this crucial leading indicator.
“The claims story remains positive,” observes Russell Price, an Ameriprise Financial economist. “The need for labor continues to grow. That’s helping to increase income, and it gives the consumer the ability to spend.”
The fact that energy prices are lower these days only strengthens the case for expecting that the US economy’s recovery will roll on. Perhaps, then, it’s no surprise that consumers are feeling good at the moment, as this week’s monthly sentiment update from the Conference Board advises. “Consumer confidence, which had declined in September, rebounded in October,” says The Conference Board’s Lynn Franco. “A more favorable assessment of the current job market and business conditions contributed to the improvement in consumers’ view of the present situation.”