(Kitco News) - After a solid start in the first half of the year, the U.S. economy is showing signs of cooling as activity slowed more than expected between July and September.
The Bureau of Economic Analysis presented the first look at the third-quarter Gross Domestic Product on Wednesday; the economy grew 2.8% in the last three months, down from 3.0% in the second quarter.
“The increase in real GDP primarily reflected increases in consumer spending, exports, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased,” the report said.
Activity missed economists' expectations as consensus forecasts were looking for an unchanged reading at 3.0%.
The gold market is not seeing much reaction to the economic data as it remains within striking distance of $2,800 an ounce.
December gold futures last traded at $2,790.90 an ounce, up 0.35% on the day. The precious metal is currently being driven mostly by technical momentum.
Michael Brown, Senior Research Strategist at Pepperstone noted that although activity was slightly weaker than expected, the economy remains fairly robust.
“Though marginally softer than expected, such a pace still represents the eighth quarter in the last nine where the US economy has notched quarterly growth in excess of 2%, providing strong evidence of the ongoing 'US exceptionalism' narrative, whereby the economy stateside continues to vastly outperform DM peers,” he said in a note.
“On the whole, today's data re-affirms that the US is indeed still on course for a 'soft landing', with growth remaining resilient, as price pressures continue to subside. Consequently, the FOMC are set to continue removing policy restriction, continuing with a 25bp cut at next week's meeting, with further such cuts likely at every subsequent meeting, until policy returns to a neutral stance next summer,” he added.
Looking at some of the components of the report, consumer spending increased 3.7% in the third quarter.
The report also noted that inflation ticked slightly higher. The Core Personal Consumption Expenditures (PCE) Index for the quarter rose 2.2%; economists were expecting to see a 2.1% increase.
The advance GDP Price Index increased 1.8%.
