November Economic Commentary: Pace of Expansion Slowing

The last week of October was filled with a number of significant economic reports as well as the Federal Reserve’s recent decision on the course of interest rates. Although the uncertainties related to the continuing Chinese trade tensions, Brexit, and a slowing global economy were frequently mentioned, the raw data suggests that the U.S. economy is still expanding, albeit at a reduced pace.
GDP Growth Slows
The initial reading of 3Q-19 real GDP showed the economy advancing at a 1.9% annualized growth rate, which is down from the 2.0% rate in 2Q-19. The year-over-year rate of growth slowed to 2.0%. Real GDP in the first half of 2019 advanced at a 2.6% annual rate, but indications are that the second half of 2019 will likely show growth closer to 1.8%. Real GDP in 3Q-19 was mainly supported by consumer spending, which is the largest part of the economy. Consumer spending grew at a 2.9% rate, down from the 4.6% rate in 2Q-19. Contributions from the remainder of the economy were essentially nil in 3Q-19. Consumer spending is moderating, and the personal savings rate is near the upper end of its range of the past five years—indications that consumers are becoming more cautious. With American business reluctant to ramp up capital investment due to trade policy uncertainty and weak global demand, consumer spending in the U.S. (accounting for 70% of GDP) is the primary support for continued economic growth. Click to read more at