Three important barometers — gross domestic product, new-home sales and consumer confidence — are showing solid improvement and their latest results point toward continued growth in the fourth quarter.
GDP rose at an annual rate of 3 percent in the third quarter, a solid performance that followed a 3.1 percent gain in the previous quarter, the Commerce Department said Friday. The growth occurred despite the damage that hurricanes Harvey and Irma inflicted on the economy, particularly in Texas and Florida.
“It’s hard to confidently discern the hurricane effects in this report, but the economy seems to be on pretty solid ground,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, told Bloomberg. “The details are reasonably solid. Consumers stepped down a little from the second quarter, but their spending still expanded at a decent pace.”
The government said personal consumption expenditures, private inventory investment, nonresidential fixed investment, exports and federal government spending contributed to the gain. Imports decreased.
The department said its preliminary estimates were that Harvey and Irma resulted in disaster losses of $121 billion in privately owned fixed assets and $10.4 billion in government-owned fixed assets. The destruction of fixed assets does not directly affect GDP, the government said.
“There are no real headwinds to growth for the first time since the expansion began,” Mark Zandi, the chief economist of Moody’s Analytics, told the New York Times. “We are at full employment and we are in full swing, let the good times roll.”
Current-dollar GDP rose 5.2 percent, or $245.5 billion, in the third quarter, to $19,495.5 billion. In the second quarter it increased 4.1 percent, or $192.3 billion.
Personal saving was $494.8 billion in the third quarter, compared with $545.6 billion in the prior quarter. The personal saving rate was 3.4 percent in the third quarter, compared with 3.8 percent in the previous one.
“Fed officials will be encouraged by both the overall performance and the composition of growth in the third quarter, which confirms the U.S. economic expansion remains on solid ground,” Michelle Girard, chief U.S. economist at NatWest Markets in Stamford, Conn., told Reuters.
Meanwhile, new-home sales soared in September to a 10-year high.
The Commerce Department said sales were at a seasonally adjusted annual rate of 667,000, which was 18.9 percent higher than the August rate of 561,000 and 17 percent above the September 2016 estimate of 570,000.
Sales rose in all regions of the country. The median sales price of new houses that sold during the month was $319,700. The average sales price was $385,200. The seasonally adjusted estimate of new homes for sale at the end of the month was 279,000, which represents a five-month supply at the current sales rate.
Consumer confidence, as gauged by the University of Michigan’s Consumer Sentiment Index, has risen to a 13-year high. The final reading for October was 100.7, up from 95.7 at the end of September.
Richard Curtin, chief economist of the university’s Surveys of Consumers, said in a statement that this is only the second time the index has been above 100 since the end of the 1990s expansion.
“The October gain was reflected in more favorable consumers' assessments of current economic conditions, as well as expected economic prospects,” he said.
“Personal finances were judged near all-time record favorable levels due to gains in household incomes, as well as decade highs in home and stock values. Lingering doubts about the near-term strength of the national economy were dispelled as more than half of all respondents expected good times during the year ahead and anticipated the expansion to continue uninterrupted over the next five years.”
The Commerce Department said orders for durable goods rose by $5.1 billion, or 2.2 percent, to $238.7 billion in September. That was the largest increase in three months. It followed a 2 percent increase in August.
The government said shipments of manufactured durable goods in September, up in four of the past five months, increased by $2.4 billion, or 1 percent, to $240.5 billion, after a 0.7 percent August increase. Transportation equipment, up in two of the past three months, led the increase, rising by $1.1 billion, or 1.4 percent, to $79.7 billion.
“Overall, business equipment investment appears to be going from strength to strength, providing further reason to believe that the economy will continue to grow at a healthy pace in the fourth quarter, as well,” Andrew Hunter, of Capital Economics, was quoted as saying in a MarketWatch story.
“There isn't a single area in the world that isn't moving forward at the moment and they need American manufacturers' machinery and equipment to help build their economies. Export demand is surging,” Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told the Los Angeles Times.
This week, economy watchers will get a full plate of financial information, topped by Friday’s release of the October jobs report. The median forecast of economists is for a gain of 300,000 jobs.
Today The Conference Board will issue its Consumer Confidence Index for October, and the median forecast is for a reading of 120.5, a solid number that would be up slightly from 119.8 in September.
The Federal Open Market Committee, the Federal Reserve’s rate-setting panel, will meet on Tuesday and Wednesday, but it is not expected to raise interest rates at this meeting.
Reports on motor vehicle sales and construction spending for October will be out on Wednesday, and the Labor Department’s report on third-quarter productivity will be released on Thursday.