US GDP revised up to 3.1pc: what the economists say

The US economy grew at faster than previously estimated 3.1pc in the third quarter. here's how economists reacted.

Tom Porcelli, RBC Capital Markets

The GDP upward revision was mostly a function of exports. On the face of it this shows consumer spending had a touch more momentum headed into the holiday season, but we are still looking at a modest outcome in the third quarter.

Having said that, it is important to note that this is very backward looking data and we already have a sense that activity in the fourth quarter started robust, but slowed dramatically. We already know momentum had faded.

Tanweer Akram, ING Investment Management

Jobless claims have shown a trend of slow declines as the labor market gradually heals. We see some signs of improvement in the labor market and that's likely to continue as housing gradually recovers and as firms slowly start to hire.

The pace of hiring is still disappointing with firms concerned about the impact of the fiscal cliff on demand. Our view is that the unemployment rate will remain well above 7 percent through the coming year and well above the Fed's numerical target of 6.5pc.

The final reading on Q3 GDP was largely within expectation and the current quarter remains quite soft. Our view is GDP will show moderate expansion of between 2.0 to 2.5 percent.

David Ader, CRT Capital Group

GDP rose on better consumption, some at the state and local level, so that's good news. The bad news is investment in equipment and software was revised lower and reflects an ongoing story. Our cautionary note is that the strong impact of inventories and defense in Q3 will extract from Q4.

Tom Di Galoma, Navigate Advisers

GDP came in surprisingly strong for Q3. This was the first gain in local and state government spending in three years.

Robert Brusca, Fact & Opinion Economics

We are more interested about things going forward. This doesn't tell us much on that.

Inventory looks like it's a little less out of balance. The investment numbers are clearly good news because there had been such a drop in that category.

Todd Schoenberger, Landcolt Capital

It is great to see GDP at 3.1pc, but how does it translate to jobs growth? We need to see this kind of growth, but jobs are also needed, and on that score the higher claims data wasn't terribly surprising.

Source: Reuters

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