This Week's Economic Highlights

The most important economic news this week was a strong GDP report, which showed the U.S. economy continuing to grow at a modest pace, despite a slowdown in the housing market. Although sales of new homes fell in October, existing-home sales rose slightly. Among the week's other reports: personal incomes and spending rose, consumer confidence dipped, and a gauge of manufacturing activity (ISM index) dropped. For the week, the S&P 500 Index fell 0.3% to 1,397. The yield of the 10-year U.S. Treasury note fell 12 basis points to 4.43%.

Third-quarter GDP growth stronger than expected: U.S. real GDP—a measure of all goods and services produced in the U.S. economy—rose at an annualized 2.2% rate in the third quarter (see graph above). This "preliminary" reading was higher than October's "advance" estimate of 1.6%. The upward revisions to third quarter GDP were mainly the result of a downward revision in imports and stronger inventory buildup by businesses. Consumer spending—which represents 2/3 of the nation's economic activity—was also revised downward, although it was higher than in the second quarter. The biggest detractor to economic growth in the period was the housing sector's cooldown. Investment in homebuilding fell at an 18% annual rate, the greatest decrease in 15 years.

Upcoming this week: Friday's report from the BLS on November payroll employment and the November jobless rate (expected to be 4.6%) will headline this week's economic reports.

Also coming up the following week is the FOMC meeting on December 12.