U.S. GDP: Good news, bad news

A quick look at what economists are saying about third-quarter economic growth numbers and last week's jobless claims data out of the United States:

"Good and bad news in today's data, with third-quarter GDP revised down for a second time, but weekly initial claims again coming in better than the street's expectation. GDP was knocked down two ticks to 1.8 per cent from the second estimate, and making the 2.5 per cent pace recorded in the flash something of a distant memory," wrote Andrew Grantham, economist at CIBC World Markets.

"Most worryingly, much of the revision stemmed from personal consumption, which is now estimated as rising by a meager 1.7 per cent (previously 2.3 per cent). Private investment was revised up a touch to partly offset, with a small negative turning to a marginal positive (1.3 per cent versus -0.9 per cent previously)."

NBF Financial senior economist Krishen Rangasamy saw the numbers in a positive light.

"While the downward revision to GDP isn't good news, it's old news at this point. More importantly, the current quarter is showing promising signs with consumers bouncing back and even housing seemingly stabilizing. The more upbeat consumer has a lot to do with the improving labour market – the latter is evidenced by the downtrending initial jobless claims," he wrote.

"It's clear that the U.S. economy accelerated in the fourth quarter based on monthly data. Unless Congress decides to be play spoilsport, momentum should carry through to 2012 helped by a resurgent consumer, business spending and inventory refills."

Going forward, it may well mean good news, agreed Scotia Capital economists Derek Holt and Karen Cordes Woods.

"It seems to me that the biggest takeaway here is that economists will likely firm up or revise slightly higher their fourth-quarter growth forecasts on a weaker than anticipated third-quarter hand off," they wrote.

"The second broad takeaway is that despite upward revisions to inventories and business investment in equipment and structures, downward revisions to consumer spending led to the unexpectedly greater headline GDP weakness."

"Claims handily beat expectations and this will only further intensify the debate over whether U.S. job gains are likely to accelerate going forward. These are the lowest claim figures since April 2008 but they leave open the debate over whether a job acceleration lies around the corner versus whether they simply signal a period of reduced firings in a relatively jobless recovery."