US Economy shows Growth for 3rd quarter. But is it only a temporary increase?

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Economic data from the U.S. department of commerce, released on Wednesday last week showed that the U.S. economy expanded at a stronger pace in the third quarter.

The official data showed that the U.S. real gross domestic product was revised higher to 3.3%.

Preliminary reports suggested that the economy expanded at a pace of 3.0% and the revised GDP was forecast to rise 3.2%.

U.S. GDP Q3 2017: 2.3% (m/m). Source: Tradingeconomics

The official data showed that the upward revision came on revised non-residential fixed investment including higher state and local government spending as well as an increase in private inventory investment.

The advancement of the third quarter GDP reflected an increase due to weaker imports and smaller sales in state and local government spending.

Although Consumer Spending slowed

Despite the upbeat data, the revised GDP report showed that consumer spending during the third quarter slowed 2.3% compared to 3.3% in the second quarter.

Still, the report showed that after an overall second quarter growth of 3%, the advancement to 3.3% was a positive sign.

In a separate report from the housing sector, data showed that U.S. pending home sales rose more than expected in the month of October.

The data reflected increased activity after the hurricane disruption the month before.

Data from the National Association of realtors showed that pending home sales index rose 3.5% in October to 109.3.

The bigger than expected increase was the highest reading in the index since June but is still 0.6% lower compared to a year ago.

Is US Economy Growth only temporary?

NAR’s Chief Economists Lawrence Yun said that:

“Last month’s solid increase in contract signings were still not enough to keep activity from declining on an annual basis for the sixth time in seven months,”

reflecting on the data for October.

Yun said that home shoppers increased but fast price gains kept the buying in check. Most notable increases were seen from the South, which showed pending home sales rising 7.4% during the month.

This comes after pending home sales activity fell 3.0% in September.