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Greetings, forex friends! Since the last FOMC meeting of the year is coming up, I thought that now would be a very good time to give y’all an overview of how the U.S. economy is faring.

Note: As with all Economic Snapshots, there are nifty tables at the bottom, so you can skip to those if you’re a forex trader who’s in a hurry.

However, the bullet points provided highlight the underlying details and trends that give the numbers their proper


  • The preliminary annualized quarter-on-quarter estimate for Q3 GDP growth was revised higher from +2.9% to +3.2%.
  • This is faster than Q3’s upwardly revised +1.4% pace (revised higher from 1.1%).
  • Even better, Q3’s reading is the fastest quarterly growth rate in eight quarters.
  • Moreover, quarter-on-quarter GDP growth has been increasing at a faster pace for two straight quarters.
  • Year-on-year, Q3 GDP grew by 1.6%, which is faster than Q2’s 1.3% rate of increase.
  • Q2’s reading is the weakest annual growth rate since Q2 2013, so the rebound in Q3 is great news.
  • This also effectively ends five consecutive quarters of slowing annual GDP growth after peaking at +3.3% back in Q1 2015.
  • Consumer spending, otherwise known as personal consumption expenditure, is still the backbone of the U.S. economy.
  • Consumer spending expanded by 2.6% (4.3% previous) in Q3, adding 1.89% to annualized quarter-on-quarter GDP growth (+2.88% previous).
  • Trade also helped to drive growth, adding 0.87% to annualized quarter-on-quarter growth (+0.18% previous), thanks mainly to the 10.1% surge in exports (+1.8% previous).
  • After being a drag for three quarters, business investment also finally contributed to growth, growing by 2.1% and adding 0.34% to total annualized quarter-on-quarter growth.
  • This is lower than originally thought, however, since business investment grew by 3.1% and added 0.52% to total GDP growth during the advanced estimate.
  • As for government spending and investment, they were drags in the first estimate but ended up adding 0.02% to total GDP growth in the preliminary estimate.


  • Non-farm employment increased by 178K in November, slightly missing expectations for a 180K increase.
  • The readings for non-farm employment have been missing expectations for four months running.
  • However, the readings are still consistently above the 100K per month that’s needed to keep up with working-age population growth.
  • Moving on, the reading for October was downgraded from 161K to 142K.
  • The reading for September, meanwhile, was upgraded from 191K to 208K.
  • That’s a loss of 2K jobs from all those revisions.
  • The service sector continued to provide most of the jobs, generating 139.4K jobs in November.
  • However, lower-paying industries provide a large chunk of the jobs.
  • Such industries include administrative and waste services (+37.7K), arts and entertainment (+10.2K), and accommodation and food services (+18.8K).
  • Meanwhile, the higher-paying manufacturing sector continues to shed jobs, losing a total of 4.4K jobs in November.
  • As for the jobless rate, it dropped from 4.9% to 4.6%.
  • The jobless rate has been sliding lower for two months in a row.
  • In addition, November’s jobless rate is the lowest reading since August 2007.
  • However, the lower jobless rate is not really all that good, since the labor force participation rate has also been falling for two months in a row.
  • The labor force participation rate fell from 62.8 to a five-month low of 62.7% in November.
  • The total number of working-age Americans who are not in the labor force now stands at 95,055K, which is a record high.
  • Wage growth was also pretty disappointing since average hourly earnings fell by 0.1% month-on-month, which is the first decline in nine months.
  • Year-on-year, average hourly earnings grew by 2.5%, which is a disappointment after October printed the fastest increase in almost seven-and-a-half years.


  • Headline month-on-month CPI increased by 0.4% in October, faster than September’s +0.3%.
  • The reading is a six-month high to boot.
  • Year-on-year, headline CPI increased by 1.6% (+1.5% previous), which is the best reading since October 2014.
  • Headline CPI has been accelerating for three consecutive months on both an annual and monthly basis.
  • The core reading, meanwhile, increased by 2.1% year-on-year, a downtick from the previous month’s +2.2%.
  • The annual core reading has been trending lower for two months in a row.
  • As for the drivers, the faster month-on-month reading was due to the 3.5% jump in energy costs (+2.9% previous), thanks mainly to the 7.0% surge in gasoline prices (+5.8% previous).
  • The rebound in apparel (+0.3% vs. -0.7% previous) and new vehicles (+0.2% vs. -0.1% previous) also helped, since both components were drags previously.
  • Meanwhile, the improved headline year-on-year reading was thanks primarily to the energy component finally being a positive contributor after being a drag for years.
  • Energy costs increased by 0.1% year-on-year in October (-2.9% previous).
  • The energy component is stripped from the core reading, which is one of the reasons why the core reading dipped further.
  • The drag to the core reading mainly came from cheaper medical care services (4.1% vs. 4.8% previous) and the lower cost of transportation services (2.6% vs. 3.0% previous).

Business Conditions & Sentiment

  • Total industrial output fell by 0.9% year-on-year in October, which is a slightly softer drop compared to the previous month’s 1.0% drop.
  • Annual industrial output has been in negative territory for 13 consecutive months now.
  • However, the drops have been softening for two months in a row.
  • Month-on-month, total industrial output was flat after a 0.2% tumble previously.
  • The flat monthly reading was due to the 2.6% decline in utilities (-3.0% previously) being offset by the 2.1% increase in mining output (-0.4% previous), as well as the steady 0.2% increase in manufacturing output.
  • Year-on-year, all three major industry groups were still in the red, which is why the annual reading is also still in the red.
  • Looking forward, ISM’s manufacturing PMI jumped from 51.9 to a five-month high of 53.2.
  • ISM’s manufacturing PMI has been improving for the third month running after it plunged to a six-year low of 49.4 back in August.
  • The improvements were broad-based, but employment and new export orders noticeably took hits.
  • As for ISM’s non-manufacturing PMI, it soared from 54.8 to 57.2, which is a 13-month high.
  • The improvements were also broad-based, although the new orders index did dip from 57.7 to 57.0.
  • Markit’s manufacturing PMI reading is even more impressive since it climbed from 53.9 to 54.1 in November.
  • November’s reading is the highest since March 2015.
  • Markit’s PMI report notes that the stronger Greenback has hurt exports a bit, which corroborates ISM’s manufacturing PMI report.
  • As for Markit’s services PMI, it slid a bit lower from 54.8 to 54.6.
  • Markit also reported a “robust and accelerated rise in new work,” which kinda contradicts the slower increase reported by ISM’s non-manufacturing PMI report.

Consumer Spending

  • Personal income from all sources increased by 0.6% month-on-month in October.
  • Personal income has been growing at a faster pace for two straight months already.
  • Taking inflation is into account, real personal income grew by 0.4% month-on-month.
  • Real personal income has been recovering for two straight months after falling to 0.1% back in August.
  • Despite the bigger increase in real personal income, total spending on goods and services only increased by 0.3% month-on-month.
  • This is slower than the 0.7% increase that was registered in September.
  • Looking specifically at retail trade, the total value of retail sales increased by 0.8% month-on-month in October.
  • This is a slightly slower increase when compared to September’s 1.0% growth.
  • The core reading, meanwhile, grew by 0.8% month-on-month, which is faster than the previous month’s 0.7%.
  • The core reading has been improving for three straight months in a row.
  • Year-on-year, headline retail sales grew by 4.3%, which happens to be a 23-month high.
  • Looking at the details of the report, 11 of the 13 retail store types reported month-on-month increases in retail sales.
  • However, of the 11 retail store types that reported increases in sales, 3 reported a weaker increase.
  • One of the three store types includes motor vehicle and parts dealers.
  • The aforementioned store type is a major contributor to retail trade, but it’s stripped from the core reading, which is why the core reading improved while the headline reading deteriorated.


  • The U.S. trade deficit widened from $36.17 billion to $42.60 billion in October.
  • This is the widest trade gap in four months and is rather disappointing after September printed the narrowest since February 2015.
  • The wider deficit was thanks to exports dropping by 1.8% to $186.36 billion while imports grew by 1.34% to $228.96.
  • The drop in exports was due to the $3.5 billion decrease in the export of goods.
  • And the decrease in the exports of goods, in turn, was due to soybean exports falling by $1.4 billion and corn exports falling by $0.5 billion, as well as the $1.0 billion decline in industrial supplies and $0.9 billion in consumer goods.
  • The further increase in imports, meanwhile, was mainly due to the $2.4 billion increase in imported consumer goods.

U.S. Economy: Growth

U.S. Economy: Employment

U.S. Economy: Inflation

U.S. Economy: Business Sentiment & Conditions

U.S. Economy: Consumer Spending

U.S. Economy: Trade

Putting it all together

The revised estimate for Q3 GDP growth is a welcome surprise. However, consumer spending did grow at a weaker pace compared to Q2.

Total personal spending did weaken in October though, which is a bad sign for the first month of Q4. But it’s still in positive territory at the very least.

Meanwhile, the trade gap widened in October, thanks to a slump in exports. Obviously, that is another bad sign for Q4.

Moreover, November doesn’t look too bright for trade because both Markit and ISM are saying in their respective PMI reports that exports are taking a hit. Markit, in particular, cited the Greenback’s recent strength as a reason for the weaker exports.

Still, the Fed is mainly focused on CPI and employment. And CPI continues to improve, as the past decline in oil prices begins to fade away.

As for the labor market, there are some worrying things, namely the slide in the labor force participation rate and the quality of the job gains. However, the Fed seldom mentions job quality.

Although it did point out the dropping participation rate in the previous FOMC meeting. And with regard to non-farm employment, it has consistently been above the 100K “floor” that’s needed to keep up with working-age population growth. The jobless rate, meanwhile, is at the lowest level since August 2007.