Solid momentum in US real personal consumption

According to the BEA' s second estimate, Q3 real GDP growth was revised higher to 2.1%QoQ saar from 1.5% in the advance estimate, in line with consensus expectations. The upward revision was primarily attributed to private inventories, which subtracted 0.6pps from real GDP growth versus an estimated drag of 1.4pps previously. Separately, slightly stronger residential and nonresidential fixed investment was more than offset by a downward revision to external demand. The stronger dollar has probably weighed on net exports, subtracting 0.2pps (from 0.0pps previously) from real GDP growth.  
Although real personal consumption was revised modestly lower to 3.0%QoQ saar from 3.2% in the advance estimate on lower services consumption, it has remained the major pillar of growth adding 2.05pps to GDP. All in all, private consumption has been on a solid upward path for more than a year with annual growth rates of higher than 3.0%, and it is expected to continue doing so on improved household finances, lower oil prices and a strengthening labor market.  

The second estimate of Q3 GDP reflected strong domestic demand and weak net trade. The private inventory upward revision might suggest that manufacturing production is adjusting to a lower level of final sales, so the inventory correction might well continue into Q4 2015. 

"We expect real GDP growth to hover around 2.0%QoQ saar in Q4 2015, underpinned by solid consumption growth. Our forecast for the average 2015 and 2016 real GDP growth remains at 2.5% and 2.6%, respectively", says Eurobank.