The U.S. economy jumped 33.4 percent at the annual rate in the third quarter, the largest increase in the history of the series, which dates to 1947, according to Chad Moutray, Ph.D. and Chief Economist at the National Association of Manufacturers. Despite soaring in the third quarter, real GDP remained down 3.4 percent year to date. The forecast for growth in the fourth (or current) quarter is 6.0 percent, with 4.5 percent growth anticipated for 2021.
Real value-added output in the manufacturing sector rose to $2.213 trillion in the third quarter, as expressed in chained 2012 dollars. It remained down 1.0 percent from the all-time high recorded in the fourth quarter of 2019 ($2.236 trillion), despite tremendous volatility year-to-date. Overall, manufacturing accounted for 11.0 percent of real GDP in the third quarter, with value-added output (in nominal terms) up to $2.329 trillion, just 1.7 percent from a record high.
In the latest NAM Manufacturers’ Outlook Survey, 74.2% of respondents were either somewhat or very positive about the outlook for their company. It represented notable improvement after the 33.9 percent and 66.0 percent readings in the second and third quarters.
Just over 29 percent of manufacturers said that their revenues will have recovered either before or during the fourth quarter, and 67.7 percent anticipate that their revenues will be back to pre-pandemic levels by the end of 2021. After two quarters with weaker domestic demand topping the list of primary business challenges, the inability to attract and retain talent led the pack once again in the fourth quarter.
New orders for durable goods rose 0.9 percent in November, rising for the seventh straight month. Overall, the durable goods manufacturing sector has bounced back soundly following steep declines in March and April due to the COVID-19 pandemic. On a year-over-year basis, new durable goods orders have grown by 3.8 percent since November 2019.
In last week’s releases for December, the Conference Board and the University of Michigan provided mixed news on consumer confidence. However, Americans were cautiously upbeat in their outlook, despite assessments of the economy being well below levels seen before the pandemic.
Personal consumption expenditures declined 0.4 percent in November, falling for the first time since April. The savings rate remained elevated at 12.9 percent. These data suggest that Americans were more hesitant in their consumer spending in November—something that will not be welcome news for retailers heading into the holiday season. Over the past 12 months, personal spending has fallen 1.3 percent since November 2019, largely on reduced spending for services.
Meanwhile, personal income fell 1.1 percent in November, but it has risen by 3.8 percent year-over-year. Manufacturing wages and salaries increased to $955.2 billion in November, with 3.7 percent growth over the past 12 months. The housing market continued to be a bright spot, buoyed by historically low mortgage rates. However, inventories remain very low, pushing prices higher.