The first look at GDP for the third quarter came in at 1.9%, down a tick from 2% in the second quarter. That was better than expected as the experts called for a slow down to 1.6% or so. Consumer spending gets the credit for the better number as spending rose a healthy 2.9% in the quarter. Also, housing helped adding to the GDP for the first time in almost two years by climbing 5.1%. That is probably due to the falling mortgage rates.
The fall was in business investment with the trade war due to China disrupting supply lines, and increased cost of raw materials slowing corporate spending.
There is no inflation pressure, so the Fed is likely to cut interest rates this week as the GDP number is not strong, just better than expected. It is showing softness from last year and the Fed is doing its part to try and reverse that trend. The politicians in Washington will be doing nothing as they are focused on next year’s election. A needed infrastructure plan would be of great benefit, something both political parties agree on, but neither are willing to move forward until after the election.