US GDP growth for the third quarter was revised on the upside. Economic activity was up by 5% (annual rate). Compared to Q3 2013, GDP is up by 2.7% and carry over growth for 2014 at the end of the third quarter is 2.25%.
GDP growth number is the highest since the third quarter of 2003.
The recent acceleration is robust as it can be seen on the graph below which represents GDP level at constant prices. We see, as it could be seen also on the previous graph, that the first quarter weakness was temporary and clearly not a change in trend
Two remarks
On the chart below, the private internal demand (HH consumption and investment) is the main support for growth. Since 2011 in the Euro Area, rapid budget deficits adjustments have not allowed a strong and long-lasting recovery of the private demand. That’s a real reason for GDP weak trend in the Euro Area. Draghi has understood that but who before him at an official level?
Even if last numbers are strong, the current GDP per capita trajectory shows a moderate recovery. GDP per capita is 2.7% above last business cycle peak (Q4 2007). It is still far from what was seen in previous recoveries.
That’s why tensions on the US economy are still limited 5 years after the end of the recession. This gives time to the Fed in the management of its monetary policy.