“Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023 according to the “advance” estimate released by the Bureau of Economic Analysis (BEA). In the second quarter, real GDP increased 2.1 percent.”
Consumer spending on essentials is a predictable metric in projecting GDP rates. The third quarter results include the summer spending on luxury items, vacations, restaurants, and summer travel.
Conventional wisdom is that the splurge will continue in Q4 as the first fully recovered post-COVID holiday season is becoming a reality.
There is evidence that manufacturing is gearing up for high demand in Q4 as the Change in Private Inventory Investment appears to be in a position of moderate acceleration. This makes sense. Companies in the goods production space will modulate capital expenditures, especially with high-interest rates, if growth is confined to a short-term period.
Nevertheless the consumer drive and the fact that US exports exceeded imports will cause a rise in inventory growth.
The tale of the tape will be the assessment of sustainability analysis in the Q1 of 2024. The Fed should have considered dropping the year-end interest rate by 2.00%, a sense of market security can drive consumer confidence into 2024.
The first-time home purchase by millennial consumers is long overdue. If the mortgage rates drop, this crucial consumer group could move from retrenchment to growth.
