The US economy maintained its growth trajectory in the third quarter, registering an annualized rate of 2.8%, consistent with the Bureau of Economic Analysis's initial estimates and aligning with expectations compiled by Bloomberg. Meanwhile, consumer spending has faced a surprising downward revision, with the growth rate adjusted from an anticipated 3.7% to 3.5%.
Additionally, the report revealed revisions to export levels and notable adjustments in private inventory and nonresidential fixed investments. In contrast, real gross domestic income (GDI) experienced an increase of 2.2% during the same period, outperforming the 2% growth observed in the previous quarter.
While the GDI figures reflected moderate improvement over the past three months, they posed potential risks to forecasts concerning capital spending in the upcoming quarter, as noted by Oxford Economics in commentary shared with MT Newswires. In terms of inflation metrics, the headline Personal Consumption Expenditures (PCE) index recorded a modest increase of 1.5%, matching initial readings, while the core PCE inflation rate, which filters out volatile food and energy prices, eased slightly from 2.2% to 2.1%. Furthermore, recent data from the BEA indicated that consumer spending growth experienced a slowdown in October, aligning with market expectations, as inflation metrics preferred by the Federal Reserve accelerated on an annual basis. According to the CME FedWatch tool, the likelihood of a 25 basis point reduction in the central bank's benchmark lending rate next month surged to 70%, up from Tuesday's 59%.
Conversely, the probability of rates remaining stable within the 4.50% to 4.75% range dropped to 30%, down from 41%..