US economic growth remains on track to accelerate in the upcoming third-quarter GDP report, based on the median estimate for a set of nowcasts compiled by The Capital Spectator.
Output is projected to increase at an annualized 3.2% rate in Q3, which reflects robust improvement over Q2’s 2.2% increase. If the nowcast is correct, economic activity will post its strongest quarter in a year. The government’s official data for the current quarter is scheduled for release on Oct. 29.
Today’s median estimate also marks a moderately stronger projected gain vs. our previous nowcast. Running the numbers on Sep. 21 indicated a 2.8% increase.
The highest nowcast that’s used in the median calculation in the chart above comes from survey-based US Composite PMI, a GDP proxy. The September reading of this indicator signaled the strongest level of business activity in more than five years, according to S&P Global Market Intelligence, which publishes the PMI data. Note that the PMI’s implied GDP growth rate for Q3 reflects The Capital Spectator’s methodological assumptions for imputing economic activity.
The PMI data also picked up on higher costs. “Strong economic growth was accompanied by a considerable rise in input costs, one that was the sharpest since October 2022,” S&P Global reports.
Recent U.S. economic growth appears to have been fueled by a powerful combination of resilient consumer spending and a surge in business investment. Households continue to spend at a healthy pace, while companies are ramping up capital expenditures, particularly in AI-related infrastructure such as data centers and semiconductor projects. The resulting AI investment boom is supporting job creation, boosting stock market wealth, and strengthening domestic demand, helping offset headwinds from rising imports and keeping economic momentum intact.
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