The US economy expanded in the third quarter at the fastest pace in 11 years, as GDP was revised up to 5%, from a previous estimate of 3.9%, matching its best performance since the third quarter of 2003. Household spending, which accounts for 70% of the economy, rose at a 3.2% annual pace, compared with a previously reported 2.2%. Spending on business fixed investment was revised up to 8.9% and business spending on equipment was revised up to 11%.
On a less upbeat note, orders for durable goods fell .7% in November, marking the third decline in the past four months. Orders for transportation equipment slumped 1.2%, while orders for core capital goods were flat following two declines.
On another downbeat note, sales of existing homes slid in November after hitting the highest level in a year as the housing supply showed signs of tightening. Existing home sales shrank 6.1% to an annual pace of 4.93 million – the weakest sales rate since May. Housing inventory began a seasonal decline, with inventory falling 6.7% to 2.09 million existing homes available, a 5.1-month supply at the current sales pace.
New home sales declined as well, slipping 1.6% in November to an annual pace of 438,000, marking the second straight monthly decline, and the slowest pace in four months. Sales in October fell 2.2% to a 445,000 annual pace. While sales haven’t increased, the supply of new homes is up 15% over the past twelve months; there were 213,000 new homes on the market at the end of November – the most since May 2010, and a 5.8-month supply.
On a brighter note, households splurged on televisions, clothing, appliances and cars as consumer spending rose .6% in November – the fastest pace in three months. At the same time personal income increased .4%, marking the fastest growth in five months.