Third quarter gross domestic product (GDP) in the US has been revised upwards from 3.6 percent to a whopping 4.1 percent and hitting marks not seen since 2011, according to the Commerce Department. The revision is due to higher than estimated consumer spending on services and business investment.
Inventories accounted for a third of the GDP figure, indicating that companies were optimistic about consumer demand. Inventories increased $115.7 billion at an annualized pace, strongest rate in three years. Strong retail sales were seen in October and November. Consumer spending increased from the original 1.4 percent to the revised two percent, according to the data. This represents .32 percentage point to the GDP figure.
Residential construction increased 10.3 percent at an annualized rate in the third quarter. Government outlays rose .4 percent, including 1.7 percent increase in state and local spending. Federal government spending fell 1.5 percent.
Canadian data today shows that inflation continues to fall behind the Bank of Canada’s target for the second consecutive month. The consumer price index increased to .9 percent, following October’s .7 percent print. These figures are below the central bank standard of two percent. “Inflation has been too low for the Bank of Canada’s liking, and November’s news added more to their worries,” said Avery Shenfeld, chief economist at CIBC Word Markets.