The U.S. Fourth Quarter GDP predictions

The U.S. Fourth Quarter GDP predictions.

0
528

The U.S. economy showed some improvement over 2016 and had a variable growth rate throughout the first three quarters of the year. The growth rate started of at 0.8% in the first quarter, 1.4% in Q2 and 3.5% in Q3. This has prompted many people to believe that the growth in Q4 should be extremely fantastic, however analysts are suggesting that this may not be so.

The analysts are suggesting that the economy may have grown at a modest rate instead of a rapid rate as would be suggested by the current trend. The expected growth rate for Q4 is roughly around 2.2%. This would mean that the overall growth rate would be roughly 1.98% under the standard growth rate of 2.0%. This would mean that the U.S. would have gone an 11th continuous year with a growth rate below a 3% benchmark.

The analysts expect these parts of the economy to perform in this way:

Businesses

Increased business investment in a marginal amount. This is a major reason as to why the economy has taken as long as it has to recover.

Consumer Spending

There has been a rise in consumer spending which is great for the economy. In the last quarter it rose by 2.5% which is still however lower than the 3% expected benchmark.

Trade Deficit

There was a rise in the trade deficit that will likely undercut GDP in the fourth quarter. Analyst say that this may have been the single most damaging factor to prevent the GDP from rising above 3%. A strong dollar is still a major concern and does negatively affect the Trade deficit.

Inflation

Inflation may have fallen back to 2% annual rate which is the expected target of the FED for 2017.

Inventories

The inventories of major company fell during the first part of the year. It was slowly reduced over the course of the year until nearer to the end. Many companies have started restocking and stock amounts should rebound heavily entering 2017. One particular group of analysts, Morgan Stanley predicts inventories will rise over $46 billion in the fourth quarter.

Housing

There has been more money allocated into building new houses for the fourth quarter. This means that a rise in housing is expected in 2017. Economists expect that the rise in residential investments around 8%. Housing has improved over the years and is a positive sign of a possible economic recovery.