US growth average-annualized for 2015 likely at 2%

US GDP growth decelerated to a sub-trend pace in Q3 following a particularly robust Q2. Despite the rapidly improving labour market, aggregate growth has been stuck around this pace since the beginning of 2011.

In assessing the strength and persistence of US growth, it is important to recognise the impact that inventories and net exports continue to have on headline results. 

Inventories added significantly to growth through the first half of 2015 on rapid inventory accrual, but a more modest pace of stocking in Q3 resulted in a 1.4ppt subtraction from quarterly GDP growth. 

"Despite the 3.9% annualised gain recorded for Q2, Q3's 1.5% increase together with Q1's 0.6% result leaves average-annualised growth for 2015 at 2.0%, broadly in line with most estimates of trend growth", says Westpac. 

Similarly, while net exports reduced the annualised Q1 headline outcome by 1.9ppts, it subsequently added modestly to growth in Q2, circa 0.2ppts.