Upward Revision To Third Quarter GDP Is Expected Based On Narrowing Of Trade Deficit And Increasing Inventories

Monday, November 19, 2012 08:29
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Upward Revision To Third Quarter GDP Is Expected Based On Narrowing Of Trade Deficit And Increasing Inventories

Tags: deficit | economic indicators | Economic Outlook

US gross domestic product (GDP) advanced 2.9% during the third quarter, indicating the economy is strong enough to weather setbacks that may result from Superstorm Sandy.

 
Momentum has picked up and improvement in private sector fundamentals is strengthening.

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The Bloomberg Economic Surprise Index, comparing 38 economic indicators with analysts’ forecasts, came in at zero for the first time since May.
 
An upward revision to GDP by the Commerce Department is expected to be announced on November 28 and will result largely from an improved trade deficit and a bigger jump in inventories than previously expected.
 
Increases in inventories do not have much carry-forward data but they do indicate enough confidence by business owners in the economy to not be afraid to keep inventory on hand.
 
Improved economic growth has broad implications ranging from continued improvement in the unemployment rate to higher-than-expected company earnings, a factor which propels equities markets.
 
The third quarter improvement in economic momentum and strength also indicates the economy will be able to weather the end-of-year headwinds expected from the fiscal cliff scenario.
 
Consumers are cautiously optimistic about holiday spending and the unemployment rate may fall faster than analysts think.

 

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