Q3 GDP Commentary from MBA Chief Economist Mike Fratantoni

The following is MBA SVP and Chief Economist Mike Fratantoni’s instant reaction to this morning’s U.S. Q3 GDP report:

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“The U.S. economy grew at a 2.8% rate in the third quarter according to the first estimate for this datapoint. The growth was due primarily to strong consumer spending for both goods and services. A half-percentage point of the growth was due to government spending on national defense, much stronger than recent quarters.

“MBA forecasts that economic growth will slow next quarter and through 2025, and that this slowdown will lead to some softening of the labor market, with the unemployment rising through next year.

“The inflation measures in this third quarter report show further progress towards the Fed’s inflation target, with the core PCE metric growing at a 2.2% rate.

“All in, these data are in line with our forecast, and we expect that the Federal Reserve will cut rates by 25 basis points at its meeting next week.”