Instant view: Q3 GDP up 2.5 percent; weekly jobless claims lower
NEW YORK |
NEW YORK (Reuters) - Economic growth increased at its fastest in a year in the third quarter as consumers and businesses set aside fears about the recovery and stepped up spending, creating momentum that could carry into the final three months of the year.
New claims for unemployment benefits fell modestly last week but a closely followed trend reading edged higher, pointing to ongoing weakness in the nation's labor market.
TODD SALAMONE, DIRECTOR OF RESEARCH, SCHAEFFER'S INVESTMENT RESEARCH IN CINCINNATI, OHIO
"It seems like they are pretty much in line and essentially without a major surprise on that front it certainly seems the European news is predominating the premarket action today. The futures were up way before the GDP numbers. Really, the components of the (European) deal didn't have any major surprises."
DAVID RESLER, CHIEF ECONOMIST, NOMURA SECURITIES, NEW YORK
"It's telling us that expectations that we'd have a better second half than the first half are being fulfilled. There's nothing spectacular about 2.5 percent growth, but it's more than double what we had in the first half of the year, and nearly double what we had in the second quarter.
"This validates the economy is still growing, but probably not thriving, that's the bottom line.
"Consumer spending is up at a modest pace, a significant recovery from a feeble second quarter. Motor vehicles sales were actually down slightly, yet we know we ended the quarter on an up beat.
"If we simply hold to the sales volume that we had in September, we'll have much stronger growth from motor vehicle spending than we had in the last two quarters. That's a potential bright spot."
DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
"The first estimate of Q3 GDP shows a 2.5% annualized increase, stronger than the preceding three quarters and a significant improvement on the first half of 2011, and was in line with market expectations. The breakdown is however mostly constructive, with the only negative in the breakdown being a sharp slowing in inventory growth, which gives scope for that sector to support Q4 data. Final sales (GDP less inventories) rose by a solid 3.6%, well ahead of an expected 2.6%, meaning a significant improvement in demand, though a 1.7% decline in real disposable income does raise some warning signs going forward."
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK
"GDP is a sigh of relief, it was spot-on expectations. We did get a lot of the corrective rebound that we were looking for. Consumer spending was healthy, which is positive, but durable goods was the big factor there with the rebound in the auto markets. There is really nothing too surprising in this release. It is a relief, but there is still more work to be done to continue a sustainable recovery.
"There was nothing really surprising in jobless claims. The trend there looks pretty flat. The labor market is not deteriorating but it does still look like it is stagnating."
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