GDP, Fed Funds Rate, Consumer Sentiment
September 25, 2015
Friday – September 25
The Bureau of Economic Analysis reported Friday that the final reading for second quarter U.S. growth surged, led by higher consumer and business spending. Second quarter Gross Domestic Product rose by 3.9%, above the 3.7% expected and up from the 3.7% read from the second estimate. The 3.9% was well above the anemic 0.6% registered in the 1st quarter. Within the report it said that consumer spending grew at a 3.6% pace, up from 3.1% that was previously estimated. GDP measures the value of goods and services produced in the nation.
On Thursday evening Fed Chair Yellen was speaking on the economy in Massachusetts and she lifted some of the uncertainty surrounding the timing of interest rate hikes. Ms. Yellen said that the benchmark short term Fed Funds rate will most likely rise by the end of the year, though the decision will still depend upon incoming economic data in the next few months. Ms. Yellen said the U.S. economy is strong enough to support an increase in the benchmark Fed Funds Rate.
Global growth concerns pushed consumers assessment of the current state of affairs in the U.S. to lows not seen since October 2014. The Consumer Sentiment Index fell to 87.2 in September, below the 91.9 in August, though above the 84.6 from a year ago. “Consumers now believe that that global economic trends can directly influence their own job and wage prospects,” said Richard Curtin, chief economist for the survey.