Slower stock-building, wider trade gap likely trimmed US Q3 GDP growth

The Bureau of Economic Analysis is expected to report that economic activity decelerated during the summer quarter. A substantial slowdown in inventory building, combined with a larger international trade deficit, probably capped real GDP growth at 2.2% annualized in Q3, down from the 3.9% clip set during the spring. 

"We would caution against reading too much into the anticipated reduction in headline GDP growth, however", says Societe Generale.

Indeed, powered by yet another solid gain in consumer spending and stepped-up business fixed investment outlays, real final sales to domestic purchasers likely climbed by 3.3% during the reference period, almost matching Q2's 3.7% gain. Turning to developments on the inflation front, the chain GDP price index is forecast to have risen by 1.4% in Q3, after a 2.1% prior-period advance. Consumer goods and services costs excluding food and energy probably contributed to that result. The core PCE deflator likely climbed by just 1.3% during the summer, following a 1.9% spring-quarter increase.