The Q3 GDP growth boost to 3.5% from 3.2%
The Q3 GDP growth boost to 3.5% from 3.2% beat estimates thanks to a larger than expected service-led consumption boost and a hefty hike in intellectual property investment, though with a surprising downward $0.5 B inventory bump. Analysts otherwise saw an expected $1.3 B trimming for net exports and boosts in government and nonresidential construction. The mix left a big Q3 hike in final sales growth to 3.0% from 2.7%. Analysts left our Q4 GDP growth estimate at 1.3%. The Q3 inventory bounce leaves a tiny upturn after a massive $123.9 B six-quarter GDP inventory downswing from a lofty $114.4 B accumulation rate in Q1 of 2015 to a $9.5 B liquidation rate in Q2. The average real GDP growth clip for the expansion sat at the same 2.1% seen in Q1 and Q2, just as the average nominal GDP growth rate for the expansion sat at Q1 and Q2's 3.7%. Real and nominal GDP growth is oscillating around long-run rates that are only just sustainable, despite an ongoing output-gap that would usually drive a period of over-performance.