September Quarter’s GDP Growth Was Fueled By Auto Output

The Bureau of Economic Analysis or BEA released its first estimate for September quarter’s GDP growth. While the 1.9% result is a bit better than the 1.6% estimate, it is the second lowest for President Trump’s time in office. It is also much lower than the 4% to as high as 6% he has touted, which even Stephen Moore, one of his economic advisors, did not believe could be achieved.

Almost as weak as the December 2018 quarter’s growth

While the headline 1.9% GDP growth was only slightly lower than last quarter’s 2.0% rate, when the impact from the very strong “Motor vehicle output” of 78 basis points is excluded the resulting 1.2% rate is almost as low as the 1.1% growth from the December 2018 quarter.

The table below shows how much an outlier the 78 basis points for “Motor vehicle output” was for the quarter. For the previous 15 quarters going back to December 2015 the largest positive contribution had been 63 basis points in the December 2017 quarter, with the second largest coming in at 32 basis points in the March 2016 quarter.

This may have been due to General Motors increasing output before the potential (and eventual) strike. Between the actual strike and this outperformance potentially being reversed in the December quarter, it could have a large negative impact on the December quarter’s GDP growth.