The United States’ (US’) Real Gross Domestic Product (GDP) increased by 3.5% in the third quarter of 2018 ending September 30, 2018, according to the advance estimate released by the Bureau of Economic Analysis (BEA). This is above consensus estimates of around 3.3%. In the second quar-ter of 2018 ending June 2018, real GDP had increased by 4.2%. The increase in real GDP reflected increases in consumer spending, inventory in-vestment, government spending, and business investment. The increase in consumer spending reflected increases in spending on both goods and services.
With 10 days to go before the U.S.’ midterm election on the 6th of November 2018, the second and third quarter GDP numbers will be a valuable talking point for Republicans on the campaign trail. These growth figures represent the strongest back-to-back growth since 2014. We believe that these strong growth figures are likely to reflect in increased interest rates as well as further downward pressure on equity valuations.