My last report suggested that any lingering early-year doubts about the essential health of the recovery were likely dispelled when the Bureau of Economic Analysis (BEA) reported that the U.S. economy grew by a healthy 4.0% in the second quarter.1 Subsequent revisions ultimately measured second quarter growth at an even greater 4.6%.2

As further evidence of an economy gathering momentum, the Commerce Department reported that U.S. GDP grew by 3.9% in third quarter 2014.3 Although the pace of growth slowed somewhat from the prior three months, it nonetheless exceeded analyst estimates and, when combined with the 4.6% gain in the second quarter, marks the strongest six-month gain since 2003.4

In brief, although third quarter retail data was mixed
and consumer spending slipped somewhat from the
torrid pace of the second quarter, there was mostly
positive news. The country’s trade gap narrowed as
exports grew, after several quarters of austerity government outlays actually increased (mostly in defense spending), and strong auto sales again helped buoy GDP growth. In fact, American consumers are buying cars at the highest annualized pace in nearly a decade.5 And the construction industry’s recovery continued, even though the pace slowed somewhat during the third quarter.6 Nonetheless, builder and realtor surveys suggest industry optimism for the remainder of the year and well into 2015.7

However, the most eye-popping numbers came from the U.S. Labor Department’s revised data indicating that there were 747,000 jobs created in the third quarter of 2014 (now over 2.3 million for the year).8 Further, unemployment has now fallen below 6% and the number of people seeking unemployment aid has dropped to levels unseen since April of 2000.9

Not surprisingly, with yet another solid quarter of job growth in the books and continued declining unemployment, the Fed followed through on its promise to end its stimulus/bond-buying program at the end of October,10instead turning its attention to monitoring wages and inflation, with interest rate increases likely to begin sometime near the middle of next year.

Turning to our survey of local indicators, it looks like our local economy also picked up the pace in third quarter 2014, with nearly every metric showing improvement over the same time last year. As was the case in my last report, unemployment continued to decline substantially in both Toledo and Lucas County, and local consumer activity stayed strong, with robust auto sales again leading the way.

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