US GDP Growth Streak Best Since 1986, Jobless Claims Starting to Fall Again

- Final 2Q GDP rose 3.3% versus estimates of 3.3% and a prior estimate of 3.3%.
- Final 2Q GDP Price Index rose 2.6% versus estimates of a 2.4% gain and prior estimates of a 2.4% gain.
- Final 2Q Personal Consumption rose 3.4% versus estimates of 3.0% and prior estimates of a 3.0% increase.
- Initial Jobless Claims for last week fell to 356K versus estimates of 418K and 435K the prior week.
- Continuing Claims rose to 2802K versus estimates of 2708K and 2658K prior.

BOTTOM LINE: The US economy grew at an above-average 3.3% annual rate in the second quarter, fueled by homebuilding and consumer spending, indicating the economy was strong entering the third quarter, before twin hurricanes slowed growth this month, Bloomberg reported. Growth in the US economy has now exceeded 3% for nine straight quarters, the longest streak since the 13 quarters that ended in March 1986. The core personal consumption expenditures index, Greenspan’s favorite inflation gauge, rose 1.7% versus a 2.4% over the first three months of the year. GDP will temporarily dip below average rates this quarter before rebounding back to more vigorous levels into year-end.

Workers dislocated by Hurricane Katrina pushed first-time claims for unemployment benefits to the highest in more than two years, Bloomberg said. About 103,000 claims last week were from people affected by the hurricanes. 214,000 people have now filed claims that were dislocated from the hurricanes. The four-week moving-average of claims rose to 376,250 from 347,250 the prior week. The insured employment rate, which tracks the unemployment rate, rose 2.1% from 2.0%. It appears as thought the worst is over for hurricane-related jobless claims. I expect claims to move modestly lower through year-end.