Q3 GDP disappointed, rising 2.0% (annualized), well short of the 2.6% expected. While the slowdown from Q2’s growth was anticipated with supply chains and Delta wreaking havoc on consumer spending and investment. The chip shortage alone cut 3.0% from consumption growth and personal consumption only grew at a 1.6% rate, down from 12.0% in Q2. Most economists expect GDP to pick back up in Q4, with the latest Bloomberg survey suggesting a 4.9% expansion.
Personal income fell 1.0% in September, worse than the expected 0.3% decline. The expiration of enhanced unemployment benefits and other programs drove the decline, despite overall wages rising 0.8%.
Despite a few high-profile misses, Q3 earnings season continued strong with the strongest year-over-year earnings growth since 2010 with over half of the S&P 500 having reported. If it ended today, Q3 would be the fourth-highest rate of companies beating estimates since 2008.