US revises strong Q3 GDP numbers upwards to 5.2%

investmentweek.co.uk:

Following the upwards revision today (29 November), market odds for a Federal Reserve rate cut as soon as its March meeting spiked, rising from 34.6% yesterday to 44.5%.

The previous GDP data, which were released last month, had already surprised analysts, coming in above expectations of 4.3%.

US GDP beats expectations at 4.9% in Q3

Following the upwards revision today (29 November), market odds for a Federal Reserve rate cut as soon as its March meeting spiked, rising from 34.6% yesterday to 44.5%, according to data from CME Group's FedWatch tool.

Odds for a rate cut by May also increased further, and now sit at 77.1%, compared to 65.2% yesterday.

Lindsay James, investment strategist at Quilter Investors, said the revised figures showed «an economy that keeps on rolling», despite the pressure from high interest rates.

Charles Hepworth, investment director at GAM Investments, noted the revision had been boosted by business investment and government spending, while consumer spending advanced a more modest 3.6%.

«Even with this higher growth rate, the consensus seems to still suggest rates have peaked and that may be corroborated in modestly weaker consumer spending. However, the resilience of US growth will continue to worry the Federal Reserve,» he added.

BoE's Haskel: Rate cuts will not happen 'anytime soon'

James agreed, noting that government spending from the Inflation Reduction Act and CHIPS Act is now making itself «felt in the data».

She added: «Compared to the second quarter, the US consumer is showing surprising resilience with spending called out by the Bureau of Economic Analysis as boosting the level of growth.

»Disposable incomes have increased by 0.1% in Q3 — much slower than the 3.5% growth seen in Q2