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Lackluster Economic Expansion - 11/11/15

The U.S. economy expanded by a lackluster one point five percent on an annualized basis during the third quarter, but don’t blame consumers.  Spending by consumers on goods like furniture and services like healthcare and insurance advanced at more than twice the pace of the overall economy during the July to September quarter. 

As indicated by writer Nelson Schwartz, the economy’s sluggish performance was largely attributable to cautious stockpiling of goods by many companies due to economic turmoil overseas.  The lack of inventory accumulation shaved one point four percent off third quarter growth.  Business spending was mixed, with investment in equipment and intellectual property rising, but spending on structures falling. 

Much of this appears attributable to reduced investment in the U.S. energy sector due to significant declines in energy prices.  Absent a federal government shutdown, Maryland’s economy is likely to expand at or better than national levels during the months ahead due in part to the state’s relative lack of exposure to declining commodity prices.  Stabilizing local housing markets are also supporting better local economic outcomes.

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.