US GDP Growth 3Q19
The US 3Q19 GDP Growth
The United States (US) real gross domestic product (GDP) increased at an annual rate (YoY) of 2.1% in the third quarter of 2019 (3Q19), according to the “second” estimate released by the Bureau of Economic Analysis (BEA). The “second” estimate is higher than “advanced” figure of 1.9%, while in the second quarter (2Q19), real GDP increased 2.0 % YoY. Both “second” and “advanced” 3Q19 figures are higher than market expectation of 1.6% YoY. Market participants had lowered expectation both in the economy and corporate profit for the on-going trade war between the US and China.
Job has been expanding
On Nonfarm payrolls in the US by the latest data, for the month of November 2019 ,published last Friday (6/12), showed an increase of 266k, easily beating market expectations of 180k. It was the largest advance in payrolls since January, with notable job gains occurring in health care and in professional and technical services. Non-Farm Payrolls in the United States averaged 126.11k from 1939 until 2019, reaching an all-time high of 1,118k in September of 1983 and a record low of -1,959k in September of 1945.
Retail sales was better-than-expected
Meanwhile, on US retail trade for the month of October showed a rise of 0.3% month-on-month (vs. market expectations of 0.2%), reversing a 0.3% drop in September. The rebound in trade was driven by motor vehicle sales and higher gasoline prices, while declines were seen on purchases of big-ticket household items and clothing. Retail Sales month-on-month in the US averaged 0.35 percent from 1992 until 2019, reaching an all time high of 6.70 % in October of 2001 and a record low of -3.90 % in November of 2008.
Lower base of expectations
Market participants take the US economy is performing better-than-expected on the base of excess worry concerning the on-going trade agreement between US and China that has yet to be finalized. Furthermore, many had expected that the impact of Tax Cuts dan Job Act (TCJA) being effective end of 2017 would diminish.
The FOMC meeting on December 10 – 11
Many has expected the US central bank would hold to the current federal funds rate target of 1.5% – 1.75% given the latest US economy data streams. August this year, the Federal Reserve interrupted its balance sheet normalization process started December 2015 to anticipate impact of trade dispute with China.
World Economy to grow by 3.4% YoY next year
The International Monetary Fund (IMF) by the latest release of October, has estimated the world economy to grow by 3.4% YoY (2019E: 3.0% YoY), despite the slowing of that of the US and Japan , and other countries of major Developed Economies. To the contrary, Emerging Market and Developing Economies (EM&DE) are expected to expand by 4.6% YoY next year vs. an estimate of 3.9% YoY this year. EM&DE consists of 150 countries by the IMF classification that include LAO P.D.R, Brazil, Vietnam, Nepal, India, Indonesia, and Brunei Darussalam.