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Economic Outlook Stays Positive with Today’s Higher GDP Estimate

Money 2Here’s one more sign that the economy appears to be on a healthier path: The Commerce Department this morning revised upward its estimate of third-quarter gross domestic product, which is the value of a country’s finished goods and services. Consumer spending, business investment and housing were all revised higher from the department’s initial estimate.

Today’s revision from the original Oct. 30 estimate “points to healthier domestic demand growth” than the department originally estimated, said Bob Hughes, senior research fellow at the American Institute for Economic Research.

Headline GDP was 3.9 percent, up from the department’s initial estimate of 3.5 percent. Prices paid by consumers over the last 12 months, excluding the volatile commodities of food and energy, were revised slightly lower. Corporate profits hit a record high during the third quarter, “suggesting solid support for equity markets,” Hughes said.

The outlook for the economy, Hughes said, “remains positive as steady improvements in the labor market, gains in household wealth, and improving consumer confidence” are likely to support continued real economic growth. That, plus low inflation, stable profit margins, and solid earnings growth “should be a very supportive environment for U.S. equity markets over the next few quarters.”

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