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October 2017

Second Consecutive Quarter of Solid Growth

For the first time since 2014, real GDP in the U.S. grew at 3% or better for two consecutive quarters.  This is based on the advanced estimate for real GDP growth for the third quarter of 2017 released today by the BEA. This is a positive sign especially considering that real GDP per capita since the end of the Great Recession had only been growing at a slow 2.1%.

GDPGQ32017

Unlike the last quarter, where growth was mainly driven by a spike in personal consumption, this quarter showed a much more leveled growth across the different factors that comprise GDP. One change worth mentioning is that for the third time since 2014, there has been a decrease in imports which may be result of a weakening dollar.

GDPTable2017.III


Hurricanes Drives CPI Up

Consumer prices in the U.S. rose 2.2% over the past year, according to the latest Consumer Price Index (CPI) data released today by the BLS.  While inflation hovered around 1% for much of 2016, 2% seems to be the new normal in 2017. 

InflationTable10-17

The CPI was up 0.5% in September alone, with about half of this due to the 13.1% increase in gas prices.  We spend a lot on gasoline (about one out of every thirty dollars for the typical consumer).  Hurricanes Harvey and Irma are certainly to blame for much of the rise in gas prices because they caused the closure of many refineries.   

The table below offers some examples of goods or services with price increases and decreases in September.

CPI Table 1017

 

 


New Jobs Report Brings Good and Bad News

The U.S. unemployment rate fell to just 4.2% in September, the lowest rate since 2001, according to the latest Employment Situation summary published by the BLS today.  Additionally, the labor force participation rate increased to 63.1%. The highest level since March 2014. Even though the labor participation rate is still 3 percentage points lower than before the Great Recession, its steady numbers coupled with low unemployment rate, suggests that the US might be operating near full employment.

LFPR10-17

On the other hand, the seven year streak of positive job gains ended, at least temporarily, as the BLS reports 33,000 fewer jobs in September.  Probably, the main causes are Hurricanes Harvey and Irma. In the first week of September, when Hurricane Harvey hit, jobless claims spiked from 62,00 to 298,000.

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