US: Resilience of consumer spending continues to underpin GDP growth – Wells Fargo

Data released today showed the US economy grew at 1.9% (annualized rate) during the third quarter, surpassing expectations.  According to analysts at Wells Fargo, GDP numbers will not affect today’s FOMC decision. 

Key Quotes: 

“As business investment continues to struggle amid the headwinds of soft global demand and trade war tensions, the resilience of consumer spending continues to underpin GDP growth.”

“We believe the Q3 GDP performance was largely anticipated by most Fed officials and will not impact their decisions later today. On one hand, officials who are most concerned about growth prospects may extrapolate the year-over-year deceleration to their outlook and argue for additional easing. On the other hand, officials who are more hesitant about additional easing will point to the fact that even with th deceleration, the pace of GDP growth remains in the longer-run target range (1.8%-2.0%) and thus does not warrant further monetary policy accommodation at this time.”

“The dichotomy between consumers and businesses is likely to continue. As such, GDP growth prospects should remain contained at around a 2% pace, on average, over the next few quarters.”