Changes to the Moody’s Analytics outlook for the U.S. economy were modest in November. U.S. GDP growth moderated in the third quarter. Real GDP expanded by 3.5% after rising 4.2% in the second quarter, according to the Bureau of Economic Analysis' preliminary estimate. Inventories led growth. Besides inventories, growth leaders included consumer spending and intellectual property investment. Drags included trade, residential investment, and investment in structures.

The release of the first estimate of third quarter national income and product accounts data resulted in changes to the near-term forecast for multiple series included in that release. This is indicated in the NIPA section of the accompanying forecast comparison spreadsheet. The forecast for top-line GDP remains the same. Moody’s Analytics expects real GDP to rise 2.9% in both 2018 and 2019 before moderating at the end of the decade.

Assumptions surrounding federal government spending were adjusted once again this month. The forecast assumes a longer lag between authorized spending and realized spending by the federal government. This has resulted in a more gradual and sustained ramp-up in near-term spending. The change has modestly impacted the quarterly pattern of GDP growth.

The forecast for the federal funds rate was unchanged this month. Moody’s Analytics expects the Federal Reserve to raise short-term rates again at its December Federal Open Market Committee meeting, with rate hikes totaling 100 basis points each in 2018 and 2019.

Our near-term unemployment rate forecast is little changed from October, with the jobless rate averaging about 3.9% this year and 3.4% in 2019. The forecast for total employment was also stable.

Our West Texas Intermediate crude oil forecast was amended to reduce volatility in the near term, as we now expect a more minor shortfall in global oil supplies stemming from Iran. Moreover, the longer-term forecast was upgraded to account for revised cost estimates. The forecast now assumes the cost per barrel will be $2 more per barrel over the long run.

Overall near-term consumer prices were adjusted to align more closely with a slowdown in 2020.

A summary of this month’s major changes to historical dataset(s) used in the global model can be found here. 

A tabular comparison (available to subscribers) of the current and prior vintages is available under Reference Files » Forecast Documentation » U.S. Macro Forecast M/M Comparison. This comparison includes an assessment of whether meaningful changes can be attributed to new or revised data, changed assumptions, or model changes.

The only stochastic Comprehensive Capital Analysis and Review variable that received a qualitative overlay this month was the 10-year Treasury rate. It was updated to reflect the most recent historical data in order to keep the forecast and history consistent.