"I am forecasting a firming in economic activity, a gradual improvement in labor markets, and an inflation trend moving in the direction of 2%."
- Dennis Lockhart, president of the Atlanta Federal Reserve
There is a higher possibility now the Federal Reserve will put tapering on the table during December policy meeting, as third quarter growth and jobless claims surprised markets to the upside. The world's largest economy logged 3.6% growth in the third quarter, up from 2.8% in the previous three months, posting the fastest expansion since early 2012. That compared to the estimates of a 3.1% headline. The main contributors to growth were businesses, as goods held by American companies added 1.68% instead of 0.83% to GDP. The main disappointment, however, came from the most important part of the economy– household spending. The U.S. families bought just 1.4% more products that in the preceding quarter, posting the smallest gain since the end of 2009.
Also Thursday a weekly report from the Labor Department showed the number of initial jobless claims fell by 23,000 to 298,000 in the week ended November 30. That was the lowest level in more than two months, and significantly better than a 320,000 figure claimed by analysts. The less volatile four-week moving average plunged to 331,750, down 7,500 from the previous week.
Stronger growth, improved hiring and stabilization in the housing market are all suggesting the Fed may trim their $85 billion monthly stimulus programme even before the end of this year.
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