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US DATA: GDP Revisions Seen Maintaining Strength, Core PCE Could Round Higher

US DATA
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  • Today's third release of Q3 national accounts at 0830ET will see the second revision to the GDP breakdown along with the first revision to GDI.
  • Real GDP growth is seen remaining at 2.8% annualized in further confirmation of a solid reading after the 3.0% in Q2.
  • Last month’s first revisions broadly confirmed a strong contribution from domestic demand, with final sales to domestic purchasers adding 3.5pp after 2.8pp in Q2 and final private demand (which Powell flagged yesterday) adding 2.7pp after 2.3pp.
  • Consumption is watched to see if it remained a key driving force behind this domestic demand strength. Consensus looks for 3.6% having been revised down to 3.5% from an initial 3.7% in Q3, either way still a marked acceleration from the 2.8% in Q2 for its fastest since 1Q23 (it added 2.4pp to GDP growth in Q3).
  • GDI meanwhile provided the softest area of last month’s Q3 release, increasing 2.2% annualized (vs real GDP 2.8%) after a downward revised 2.0% in Q2 (initial 3.4% and vs real GDP 3.0%).
  • Analysts likely give greater caution to the GDI numbers though, having printed far softer growth than GDP prior to comprehensive national account revisions back in September after which they converged notably towards prior GDP trends - something that multiple FOMC members subsequently noted.
  • Looking through noisier quarterly rates, both metrics currently show solid economic growth, with GDP at 2.7% Y/Y (within which PDFP increased 3.1% Y/Y, "a really good number" in Powell's words) and GDI at 3.1% Y/Y in Q3. We watch to see how this changes.
  • This strength was reflected in yesterday’s Fed forecasts in the updated SEP. Real GDP growth was revised up from 2.0% to 2.5% for 4Q24 (which if anything currently looks like it could undershoot further considering GDPNow is running above 3% annualized for Q4) along with a more modest upward revision from 2.0% to 2.1% for 4Q25.
  • Finally, note that it really doesn’t take much for core PCE inflation to round higher in Q3 at what could look like a surprise to the rounded 2.1% expected. It was revised down from 2.156 to 2.146% in last month’s Q3 update. 
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  • Today's third release of Q3 national accounts at 0830ET will see the second revision to the GDP breakdown along with the first revision to GDI.
  • Real GDP growth is seen remaining at 2.8% annualized in further confirmation of a solid reading after the 3.0% in Q2.
  • Last month’s first revisions broadly confirmed a strong contribution from domestic demand, with final sales to domestic purchasers adding 3.5pp after 2.8pp in Q2 and final private demand (which Powell flagged yesterday) adding 2.7pp after 2.3pp.
  • Consumption is watched to see if it remained a key driving force behind this domestic demand strength. Consensus looks for 3.6% having been revised down to 3.5% from an initial 3.7% in Q3, either way still a marked acceleration from the 2.8% in Q2 for its fastest since 1Q23 (it added 2.4pp to GDP growth in Q3).
  • GDI meanwhile provided the softest area of last month’s Q3 release, increasing 2.2% annualized (vs real GDP 2.8%) after a downward revised 2.0% in Q2 (initial 3.4% and vs real GDP 3.0%).
  • Analysts likely give greater caution to the GDI numbers though, having printed far softer growth than GDP prior to comprehensive national account revisions back in September after which they converged notably towards prior GDP trends - something that multiple FOMC members subsequently noted.
  • Looking through noisier quarterly rates, both metrics currently show solid economic growth, with GDP at 2.7% Y/Y (within which PDFP increased 3.1% Y/Y, "a really good number" in Powell's words) and GDI at 3.1% Y/Y in Q3. We watch to see how this changes.
  • This strength was reflected in yesterday’s Fed forecasts in the updated SEP. Real GDP growth was revised up from 2.0% to 2.5% for 4Q24 (which if anything currently looks like it could undershoot further considering GDPNow is running above 3% annualized for Q4) along with a more modest upward revision from 2.0% to 2.1% for 4Q25.
  • Finally, note that it really doesn’t take much for core PCE inflation to round higher in Q3 at what could look like a surprise to the rounded 2.1% expected. It was revised down from 2.156 to 2.146% in last month’s Q3 update.