Consumer spending again is the prime driver, delivering 3.2% in growth. Inventories contracted, shaving 1.44% off the GDP.
The robust consumer spending of curse led many to believe that the Federal Reserve will likely raise the interest rates in December.
Herein lies the question: If consumer spending is going to be robust, why the need to cut inventories? Of course, on the other side of the coin, the cut in inventories was viewed as cyclical and should correct itself in the ensuing months.
The anticipation of a rate hike immediately push majority of commodity prices down, due to the strengthening of the US$.
At this juncture, the GDP remains preliminary as there will be revisions later on. My bet is that it will be revised down from 1.5%.
This is because of a string of data released showed some disturbing trends in September:
1) New home sales is down
2) Pending home sales is down
3) US business spending gauge fell
Still the November 6 Jobs Report will give a better indication in the direction of the Federal Reserve.
Should there be an interest rate hike, we could see general weakness and potential recession in emerging markets.
The above is just my opinion. You are encouraged to do your own research.
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