Q3 2006 GDP 2.2% & PCE 2.2%
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Posted by Kirk Lindstrom Nov 29, 2006 |
The BEA announced US GDP was revised up to 2.2% from the preliminary 1.6% estimate for the third quarter of 2006. At the same time a key measure of core inflation, the personal consumer expenditure price index or PCE, was revised a tenth of a point lower to 2.2%. The year-over-year PCE growth remained unrevised at 2.4%, well above the Federal Reserve's "comfort range" of 1 to 2%.
Consumers, investments and autos boosted Q3 GDP.
Here are the highlights from the report
- U.S. Q3 GDP revised to 2.2% vs.1.6%, ahead of 1.8% expected
- U.S. Q3 core PCE price index up 2.2% vs. 2.3% previously
- U.S. Q3 GDP revisions on higher inventories, less imports
- U.S. GDP up 3% in past year
- U.S. Q2 wages, salaries revised lower by $100.8 billion
- U.S. Q3 corporate profits up 4.2% quarterly, 30.9% y-o-y
- U.S. core PCE price index up 2.4% in past year
- U.S. Q3 final sales revised up 2.1% vs. 1.7%
You can read the full release from the BEA here.
One thing that jumps out at me from the above data is the Federal Reserve's Open Market Committee, FOMC, has been correct to raise interest rated to 5.25%. Core inflation remains above their target range, but 5.25% seems high enough to bring elevated core inflation down slowly while slowing the economy just enough to keep the economy out of a recession.
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Definitions:
- GDP is Gross Domestic Product
- PCE is Personal Consumer Expenditure Price Index, a key measure of inflation.
- BEA is Bureau of Economic Analysis
- Federal Reserve "comfort zone" for inflation is 1.0% to 2.0%
- BEA website http://www.bea.gov/beahome.html
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DISCLAIMER: Answers & my words are general in nature, are not meant as specific investment advice, and do not necessarily represent the opinion of anyone but Kirk. Individuals should consult with their own advisors for specific investment advice.
