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U.S. Economic Outlook - Quarterly Developments

The U.S. economic expansion, which is in its tenth year, is approaching record length but not strength. November marked the 113th month of growth for the U.S. economy, and there have been 38 consecutive quarters of growth. This is the second longest expansion on record, only the 1991-2001 expansion is longer, and it is expected to continue into next year and become the longest on record.

20 December 2018|Briefing note

In the third quarter of 2018, the U.S. economy grew at an annualized rate of 3.5% after rising 4.2% in the second quarter. Growth remained strong, but its composition deteriorated, as inventories accounted for almost two-thirds of the growth. Growth was led by consumer spending, which contributed 2.45% to growth, down from 2.6% in the second quarter, and inventories, which contributed 2.3%.

  • U.S. employers added 2,268,000 jobs from January to November 2018, more jobs than in 2017. Unemployment rate held steady at 3.7% at the end of November, the lowest level since 1969, while year-on-year wage growth was unchanged at 3.1%, equal to the quickest pace since April 2009.
  • The productivity of nonfarm workers increased at a 2.3% rate in the third quarter, a deceleration from the 3% advance in the second quarter. Labor costs cooled, signaling an easing in inflation pressures.
  • The trade deficit widened to its highest level in 10 years in October, rising more than expected. Imports have surged due to solid demand growth, while exports have dipped from their May highs due to rising tariffs and a relatively strong dollar.
  • The Federal Open Market Committee (FOMC) raised interest rates by a quarter point three times in 2018 so far – in March, June and September – and signaled that one more increase is on the way in December, as Fed officials expressed confidence on the strength of the U.S. economy.
  • The U.S. economic outlook becomes murkier in 2019, as policymakers weigh risks including slower global growth and less fiscal stimulus.

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