Since our last update in the spring the US economy has shown strong growth over the past several months. Gross Domestic Product (GDP) figures for the second quarter indicate the economy grew 4.2%, an increase from 2.2% in the first quarter and 2.9% in the fourth quarter of 2017.Growth in the second quarter was driven in part by strong consumer spending. On Friday the first estimate for the third quarter GDP was reported at 3.5%.
With strong GDP growth job creation has remained solid with an average of 189,000 jobs added per month for the past three months through September. The unemployment rate at the end of September was 3.7% which is down from the 4.1% rate at the end of 2017. The unemployment rate is the lowest level since 1969. And just to provide some context for how far the economy has come from the depths of the Great Recession the unemployment rate in October 2009 was 10.0%.
Consumer confidence surveys continue to show consumers remain positive regarding current economic conditions. The Conference Board’s Consumer Confidence Index in September was 138.4 up from 134.7 in August. The September reading is at an 18 year high and is close to the all time high of 144.7 reached in 2000. An alternative measure of consumer confidence is the University of Michigan consumer sentiment index which for September was 100.1 an increase from 96.2 in August. It was only the third time since 2004 the index has been above 100. The high consumer confidence levels should bode well for healthy consumer spending over the coming months.
Consumer credit performance remains steady. The S&P/Experian Consumer Credit Default Index was 0.87% which is about flat from 0.86% in August 2017 and 0.91% at the end of 2017.