US economic growth in the fourth quarter is expected to hold at or near the solid 3% pace that’s been reported in Q2 and Q3, according to several recent forecasts. If the outlook is accurate, US GDP growth could post its strongest and longest run of quarterly increases in over a decade.
The average forecast points to a 3.3% increase in output for Q4, based on seven recent estimates (see chart below). This projection marks a modest improvement over the solid 3.0% gain in Q3 and the 3.1% rise in Q2 (seasonally adjusted annual rates).
Economists at First Trust last week advised that the US economy is “accelerating.”
Halfway through the fourth quarter, monthly data releases show real GDP growing at a 3%+ annual rate. If that holds, it would make for three consecutive quarters of growth at 3% or higher. Believe it or not, the last time that happened was 2004.
Some forecasts are more cautious. Survey data published by IHS Markit last week point to an encouraging rise in Q4 growth, but at a rate that’s moderately below the pace in the previous quarters.
“US businesses reported another month of solid growth in November, putting the economy on course for a reasonable, though by no means stellar, fourth quarter,” said Chris Williamson, chief business economist at IHS Markit. “Current PMI readings are broadly consistent with GDP growing at an annualized rate of just over 2%.”
At the opposite extreme, Now-casting.com’s latest estimate calls for a sharp acceleration in Q4 growth to 4.6%, based on the firm’s Nov. 24 econometric analysis.
Keep in mind that it’s still early for Q4 data – the first print of October data is nearly complete, but there are only a handful of preliminary estimates for November’s profile and December is a complete unknown at this point. Based on the published numbers to date, however, it’s fair to say that a disappointing Q4 GDP report at this stage looks unlikely. But with nearly two months to go before the Bureau of Economic publishes the initial fourth-quarter data, it’s premature to conclude that another strong quarter is destiny. The preliminary clues so far, however, are certainly encouraging.