U.S Commerce Department announces a 2.1% annualized growth in GDP

According to the government data released earlier today, the U.S economy noted an improvement in the fiscal third quarter. The report highlights that economic expansion remained at a moderate rate towards the end of 2019. As per the analysts, a rising strength of the U.S labor market may have contributed to supporting moderate economic expansion.   

Financial Markets Remained Weighed By The Fear Of Recession In 2019’s Summer

The financial markets were weighed due to the fear of recession in the summer of 2019. The government data on Friday, however, also highlighted that November noted a sharp increase in U.S consumer spending that helped remove the clouds of recession-related risks.

The analysts further commented on Friday that three consecutive rate cuts from the U.S Federal Reserve in 2019 have indeed helped the U.S economy to catch up on pace in the past few months. In December’s policy meeting, the Fed had announced that further leniency in monetary policy is not expected anytime soon as the lawmakers are to observe the impact of the previous rate cuts in boosting the U.S economy in the upcoming months.

The third estimate of the Commerce Department announced the U.S GDP to have improved at a 2.1% rate (annualized), which was in line with the analysts’ expectations. During the period from April to June, the Commerce Department had announced the GDP growth at 2.0%. In terms of quarterly improvement, the figure noted 0.5% growth as compared to that of the last quarter.

The consumer spending report, on the other hand, highlighted improvement in November that marked the fastest pace in the past four months. Growth in income was reported to have marked its best since August as well. The Commerce Department reported a 0.4% annualized growth in consumer spending in November. October’s report had printed a 0.3% growth instead.

Consumer Spending Accounts For Around 70% Of All U.S Economic Activity

Following an unexpected decline in October, growth in income was recorded at 0.5% in November. Consumer spending accounts for around 70% of the overall U.S economic activity. The consumer spending report also highlighted on Friday that business spending on power infrastructure and other nonresidential structures at large have also improved in November.

The response in the forex market to the U.S economic data was relatively aggressive. EUR/USD was seen trading at 1.1120 level in the early session on Friday. Following the reports, however, the pair fell sharply to 1.1072 level where it is settling at the moment. The U.S dollar index, on the other hand, broke above the 97.00 mark again and is currently trading at 97.28.