Gradual Growth

While 16Q3 annualized GDP growth was 2.9%, a two-year high, it was primarily because of a swing in inventories, which is unlikely to be repeated, and a one-off rise in soybean exports. Conversely, consumer spending grew by 2.1%, down from 4.3% in 16Q2. YTD, GDP growth is averaging 1.7%, just shy of its weak long-term growth potential but strong enough to keep the labor market improving. Rates rise in December.