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Strong 3Q GDP Followed by Lackluster October Spending

As usual, the short week of pre-Thanksgiving trading sessions were very quiet, with only slight movements in fixed income markets.  Despite the lack of market activity, the economic calendar was full of potentially market moving data.  The first measure of third quarter GDP was released, which indicated that economic output rose 2.1% during the quarter.  This outpaced expectations of a 1.9% advance as personal consumption (i.e. consumer spending) once again provided the fuel for continued economic growth. 

Despite that positive news, consumer spending decelerated heading into the fourth quarter, with inflation-adjusted purchases rising just 0.1% (the smallest gain since February) despite increases in wages and salaries.  That disappointment was offset by a suprising increase in October durable goods orders, as the trade picture seemed to brighten slightly.

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