As the Fed ends bond-buying, Janet Yellen will expand her influence
AP OCTOBER 30, 2014 6:03PM
QE over, now what?
Fed Brings Quantitative Easing Program to an End
Janet Yellen can now stamp her influence on the US central bank.Janet Yellen can now stamp her influence on the US central bank. Source: AP
QE over, now what?Fed Brings Quantitative Easing Program t...Janet Yellen can now stamp her influence...
WHEN the Federal Reserve announced the end of its landmark bond buying program, it also signalled the start of something else: the Janet Yellen era.
Officially, Ms Yellen has been Fed chair since February. But the phase-out of the bond-buying stimulus program Ms Yellen inherited from her predecessor, Ben Bernanke, truly marks her inauguration. She can now begin to fully stamp her influence on the central bank.
With the job market showing steady gains, Ms Yellen must now grapple with the fateful decision of when to raise short-term interest rates, which the Fed has kept at record lows since 2008 to help the economy.
“Janet Yellen’s ability to place her mark on the nation’s monetary policy is only now opening up,” said Scott Anderson, chief economist at Bank of the West. “It will largely be Yellen” who guides rates back to their historic averages from near-zero levels.
Ms Yellen will also preside over the unwinding of the Fed’s vast portfolio of bonds, which its purchases have magnified to more than $US4 trillion, a record high. The bond buying had been designed to keep long-term loan rates low.
FED: Ends stimulus program
Mr Bernanke’s tenure at the Fed was focused on bolstering the financial system and rescuing the economy. Ms Yellen’s will require a delicate balancing act to bring the Fed back to normal: She must withdraw the Fed’s stimulus without destabilising the economy.
“If we’re moving to an era where things will become less accommodative, then we’re in the Yellen era,” said Jay Bryson, a global economist at Wells Fargo.
For Ms Yellen and other Fed officials, the decision of when to begin raising rates toward their historic averages hinges on two major economic forces: Jobs and inflation.
A recent hot streak in job growth has shrunk the unemployment rate to 5.9 per cent from 7.2 per cent a year ago. Those gains suggest that the Fed may begin to lift rates earlier than expected.
In a statement it issued after ending a policy meeting early today (AEDT), the Fed noted that hiring is strengthening and that the excess of would-be job holders is “gradually diminishing.” Accordingly, it must eventually withdraw its stimulus.
The statement’s mention of “solid” job gains doesn’t mean the economy has regained full strength in Ms Yellen’s eyes — particularly because pay growth has been all but flat and housing has lagged behind the rest of the recovery.
“There is a long way between saying that and the labour market is healthy,” said Richard Moody, chief economist at Regions Financial.
Surges in hiring usually cause prices to rise, yet inflation has remained persistently below the Fed’s 2 per cent target. Muted inflation suggests a weaker economy than indicated by the falling unemployment rate.
The Fed did reiterate its plan to maintain its benchmark short-term rate near zero “for a considerable time.” Most economists predict the Fed won’t raise that rate, which affects many consumer and business loans, before June.
But its confirmation that it would end its bond buying program and perhaps move closer to a rate increase suggested the start of a new period for the Fed.
On balance, economists saw the Fed’s statement as showing less concern about unusually low inflation, which has helped delay a rate increase. Some analysts said the market reaction today indicated that investors saw the Fed statement as at least setting the stage for rate hikes starting sometime next year.
“The trick will be normalising interest rates without creating another recession or unleashing higher inflation or adding to global financial instability and financial bubbles,” Mr Anderson said.
Michael Hanson, senior economist at Bank of America Merrill Lynch, said the Fed still appears likely to put off any rate increase until at least mid-2015.
“This isn’t the Fed rushing to the exits,” he said.
Mr Hanson noted that while the Fed kept its “considerable time” phrasing, it added language stressing that any rate increase would hinge on the economy’s health. Previously, many analysts had interpreted the “considerable time” phrase to mean the Fed wouldn’t raise rates for a specific period after it ended its bond purchases.
The Fed’s statement was approved 9-1. The one dissent came from Narayana Kocherlakota, president of the Fed’s regional bank in Minneapolis. He contended that the Fed should have signalled its intention to maintain a record-low benchmark rate until the inflation outlook has reached the central bank’s 2 per cent target. And he argued that the Fed should have continued its bond purchases at the current pace.
Ms Yellen has stressed that while the unemployment rate is close to a historically normal level, other gauges of the job market remain a concern. These include stagnant pay; many part-time workers who can’t find full-time jobs; and a historically high number of people who have given up looking for a job and are no longer counted as unemployed.
AP
Fed's experiment produces precious little
By
Martin Hutchinson
Richard Beales
THE Federal Reserve doesn't have a whole lot to show for its experiment in quantitative easing. Three rounds of bond purchases worth nearly US$4 trillion over six years ended with Wednesday's rate-setting committee statement. Despite the stimulus, US GDP growth has remained stuck at just over 2 per cent. The only clear effect may have been to boost asset prices, notably stocks.
The Fed's first round of QE occurred immediately after the 2008 crisis and involved the purchase of mortgage bonds at a time when the housing market was in steep decline. As a corrective to the market failures surrounding a financial panic it made sense even to traditional monetary economists and it probably helped keep mortgages available, arrest the decline in house prices, and turn around the economy.
The second and third rounds of QE, kicked off in late 2010 and fall 2012, respectively, were supposed to boost GDP growth, thereby reducing unemployment. It's hard to see much of that effect. Upward deviations from the average 2.2 per cent annual GDP growth since the recession ended in the second quarter of 2009 don't seem to coincide with periods of Fed bond-buying.
The US central bank would argue that without QE things would have been worse. And at least flooding the market with cheap money hasn't brought inflation, as critics feared. But that's scant return on over US$2 trillion of bond purchases between QE2 and QE3.
One caveat is that the early days of QE3 coincided with reduced federal government spending thanks partly to a dearth of compromise in Washington. The Fed's then-chairman Ben Bernanke said at the time that monetary efforts could only achieve so much without fiscal stimulus occurring in parallel.
Still, it's hard to find convincing evidence that quantitative easing has been noticeably helpful for output or jobs. The clearest correlation is with rising asset prices, and especially soaring US stocks. The S&P 500 Index has more than doubled since the start of QE1, and has almost tripled from its March 2009 nadir.
The data support the notion that bond-buying is a useful tool for the Fed in the throes of a financial crisis. But thereafter, QE looks increasingly ineffective. That should put the kibosh on any talk of QE4.
2015 rate rise 'plausible': Fed official
DOW JONES NEWSWIRES NOVEMBER 03, 2014 6:45AM
US inflation pressures remain subdued despite solid improvement in the job market, according to Jeffrey Lacker, president of the Federal Reserve Bank of Richmond.
The outlook gives the central bank room to remain patient about when to begin raising interest rates, Mr Lacker said.
"Next year sometime it looks plausible that we'll start needing to increase interest rates," said Mr Lacker, who will have a vote on the policy-setting Federal Open Market Committee in 2015, in an interview with America's Fox News. "We'll try to time that carefully given what the economy needs."
Mr Lacker, a sceptic of the central bank's more unconventional policies, was fairly optimistic on the economy.
"Given the economic challenges we've faced, I think this economy has turned in an excellent performance," he said.
"This is the sixth year of our recovery, we've grown at about 2-1/4 per cent at an annual rate, the unemployment rate has come down from 10 per cent to 5.9 per cent, and inflation is low and not a problem," he said. "I think it's likely to continue at about that pace and I think we're poised for growth ahead."
Mr Lacker said he was not too worried about signs of softer growth overseas, including places like Europe, China and Japan. "Stagnant growth abroad wouldn't change the outlook much. We've been getting that for the last couple of years and seem to have managed to cope pretty well nonetheless," he said.
While the Fed decided last week to conclude its bond-buying program, the central bank's large balance sheet was still providing support to the economy and lending, Mr. Lacker said.
"Even though we stopped buying them, we still hold those securities, so that stimulus is still there as long as we hold onto those," he said.
US construction spending retreats
AP NOVEMBER 04, 2014 3:30AM
US construction spending fell for a second straight month in September as a slight rebound in housing was offset by further declines in nonresidential building and in government projects.
Construction spending dropped 0.4 per cent in September compared to August when spending fell 0.5 per cent, the Commerce Department reported.
After four straight monthly declines, housing construction edged up 0.4 per cent in September but nonresidential building fell 0.6 per cent with weakness in construction of hospitals, power plants and factories. Government construction was also down, falling 1.3 per cent as spending on projects at the federal and state and local levels declined.
The overall declines in the past two months were disappointing but economists say the weakness will be temporary. They are looking for construction activity to support economic growth in coming months.
The September drop pushed construction spending down to $US950.9 billion ($1.0 trillion) at a seasonally adjusted annual rate, still a modest 2.9 per cent higher than the level a year ago.
The increase in housing reflected a solid 1.1 per cent gain in construction of single-family homes which helped offset a 1 per cent drop in the smaller apartment sector.
Residential construction, which had fallen for four straight months, now stands at a seasonally adjusted annual rate of $US349.1bn, a slight 0.7 per cent higher than a year ago.
The decline in government activity reflected a 0.3 per cent drop in spending at the federal level and a 1.4 per cent decline in spending at the state and local levels.
Government construction activity has been squeezed by tight budgets reflecting the severe 2007-2009 recession and the weak economic rebound since that time.
US manufacturing surprises on upside
DOW JONES NEWSWIRES NOVEMBER 04, 2014 3:30AM
While Chinese and European manufacturers show stress from the slowdown in global demand, the US manufacturing expansion continued at a stronger clip in October, according to a survey released by the Institute for Supply Management.
The ISM's manufacturing purchasing managers index increased to 59.0 last month from 56.6 in September. In October, 16 of 18 reporting industries reported growth.
Economists surveyed by The Wall Street Journal had expected the latest PMI to ease slightly to 56.0.
Other manufacturing PMIs around the world slowed in October, a few falling into or staying at readings that indicate contraction. China's two factory readings were barely above 50 last month. The total eurozone PMI was slightly expansionary, but the readings for France and Italy showed contracting activity. The UK PMI was one of the few indexes to accelerate in October.
In the US, however, the ISM data show no weakness in manufacturing.
"Comments from the panel generally cite positive business conditions, with growth in demand and production volumes," the ISM report said.
The new orders index jumped to 65.8 from 60.0 in September. In one sign of the global slowdown, though, the exports index slowed to 51.5 from 53.5.
The ISM production index was little changed at a multi-year high of 64.8 in October from 64.6 in September.
Labor demand picked up in September. The employment index rose to 55.5 from 54.6.
The ISM's prices paid index eased to 53.5 from 59.5.
US manufacturers continued to build inventories last month. The ISM inventory index increased to 52.5 from 51.5.
US nonfarm payrolls grow by 214,000
DOW JONES NEWSWIRES NOVEMBER 08, 2014 1:15AM
US payrolls grew modestly in October but the unemployment rate fell and wages edged up, signs the labour market is strengthening.
Nonfarm payrolls grew a seasonally adjusted 214,000 last month, the Labor Department said on Friday. Since the start of the year, employers have added more than 220,000 workers on average each month, a pace last consistently maintained nearly a decade ago.
Revisions showed the economy added 31,000 more jobs the prior two months than previously estimated. Employers added 256,000 jobs in September compared to an initial estimate of 248,000. The August reading was revised to 203,000 from the previously reported 180,000.
The unemployment rate, obtained from a separate survey of households, fell to 5.8 per cent last month. That's the lowest level since 2008.
Economists surveyed by The Wall Street Journal had expected payrolls to increase by 233,000 in October and the unemployment rate to remain 5.9 per cent.
Friday's report suggests demand for workers continues to strengthen modestly, a trend seen since hiring ramped up this spring.
The broader economy contracted in the first quarter during an unusually harsh winter, and then rebounded strongly during the middle of the year. Improving consumer confidence and falling oil prices could support further expansion. But China's slowing growth, Europe flirting with recession and Middle East turmoil are raising concerns about the durability of US economic gains.
Sustained economic strength in the US could hinge on advancing wages. In October, average hourly earnings for private-sector workers rose 3 cents to $US24.57. Earnings were up 2 per cent compared to a year earlier, a pace just above mild inflation. Consumer prices rose 1.7 per cent in September from a year earlier.
The unemployment rate fell, suggesting diminished slack. The labor-force participation rate rose 62.8 per cent from 62.7 per cent in September, but the rate remains near the lowest levels since the late 1970s. Before the recession, the rate stood at 66 per cent.
A broader measure of unemployment -- which includes involuntary part-time workers and Americans too discouraged to apply for jobs-fell by three-tenths of a percentage point to 11.5 per cent in October. That's down from 13.7 per cent a year earlier, but elevated by historical standards. During last decade's expansion, the rate hovered between 8 per cent and 10 per cent.
With many Americans on the sidelines of the labor market, the supply of workers could be larger than top-line figures indicate. That excess capacity could in turn hold down wages.
The health of the labor market is an important factor in the Federal Reserve's decision on when to raise short-term interest rates from near zero, where they've stood since 2008. The central bank ended its bond-buying stimulus program in October. Following their latest meeting, officials noted improvement in the labor market and consumer spending, but remained concerned about the housing market and sluggish inflation.
Friday's report showed fairly broad based jobs gains. The leisure and hospitality sector added 52,000 jobs and retailers added 27,100. But higher-wage fields also grew. Manufacturing added 15,000 jobs, and professional and business services grew by 37,000.
Government payrolls increased by 5,000 last month, led by state and local hiring. After deep cut backs in recent years, government budgets have stabilized and public spending contributed to overall economic growth for the second straight quarter this summer.
US Senate rejects controversial oil pipeline in close vote
AFP AFP NOVEMBER 20, 2014 12:00AM
THE US Senate has rejected by a single vote a bill that would have approved construction of the Keystone XL pipeline to bring crude oil to Gulf coast refineries, setting up a confrontation between President Barack Obama and a Republican-controlled congress.
Rejection of the $US5.3 billion ($6bn) project came by the narrowest of margins and Republicans vowed to approve the bill early next year when they take control of the Senate.
Yesterday’s vote relieves the Democrat President — at least for now — of the potential headache of vetoing the measure.
Supporters of the long-delayed project, a top Republican energy priority that has become a political football, came up one vote short of the 60 needed for approval in the 100-member chamber.
Many of the 45 Republicans who supported the bill, as well as some of the 14 Democrats who voted with them, described Keystone XL as a “no-brainer” that would generate thousands of jobs and improve US energy independence.
But critics, led by Senate Democrat Barbara Boxer, oppose the initiative over concerns it would harm the environment.
Top Republican senator Mitch McConnell said afterwards: “Senate Democrats once again stood in the way of a shovel-ready jobs project that would help thousands of Americans find work — a remarkable stance after an election in which the American people sent a clear message to congress, to approve serious policies.
“But once the 114th congress convenes, the Senate will act again on this important legislation, and I look forward to the new Republican majority taking up and passing the Keystone jobs bill early in the New Year.”
TransCanada, the company behind the pipeline, was similarly buoyant. “We will continue to push for reason over gridlock, common sense over symbolism and solid science over rhetoric to approve Keystone XL and unlock its benefits for America,” said chief executive Russ Girling.
The rejection was a victory for environmentalists who fought against bringing crude oil from Canada’s controversial tar sands.
Senator Boxer had warned of tar-sand “poison” and “misery” afflicting American communities and stood on the Senate floor before a photograph of Chinese men wearing face masks under a grey haze. “I remember the days in Los Angeles when the air looked like this,” she said. “I don’t want it to look like what it looks like in China.”
After the vote, she said the bill’s opponents “stood up for what is right — protecting the health of families and the health of the planet”.
Congressional Republicans have long pushed the Obama administration to lift its hold on the corporate-funded project, which remains under extended review six years after permit requests were submitted.
The 59-41 Senate vote, the most contentious action in the chamber since Republicans roared to victory in the mid-term elections this month, came down to the wire, with supporters scrambling in vain for a final Democrat to sign on.
“Congress is not — nor should it be — in the business of legislating the approval or disapproval of a construction project,” independent senator Angus King said of the pipeline that would transport 830,000 barrels of oil per day from Canada’s Alberta province to US refineries.
Keystone’s progress is closely monitored in Canada, where government officials and TransCanada have said it would provide an economic boon.
The US State Department, which has authority over Keystone, released a review in January finding that carbon emissions would not be significant. Mr Obama has said he would only approve Keystone if it was shown to have minimal carbon emissions impact.
Critics argue that tar-sand bitumen is some of the world’s dirtiest oil. But Republicans tout Keystone’s generation of 40,000 temporary construction jobs. The State Department says only 35 permanent jobs will result.
AFP
http://www.cnbc.com/id/102200011
Fed worried about sub-2% inflation 'for quite some time,' minutes show
Jeff Cox | @JeffCoxCNBCcom
2 Hours Ago
CNBC.com
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Federal Reserve officials are worried that inflation may stay low "for quite some time" despite the central bank's multi-trillion dollar efforts to jump start the economy, according to minutes from the October meeting released Wednesday.
Open Market Committee members also discussed just how they should go about raising interest rates as monetary policy normalizes, and expressed some worry over market volatility during the process.
"Participants anticipated that inflation would be held down over the near term by the decline in energy prices and other factors, but would move toward the Committee's 2 percent goal in coming years, although a few expressed concern that inflation might persist below the Committee's objective for quite some time," the minutes said.
The Fed at its October meeting voted to end its monthly bond-buying program known as quantitative easing. The lone dissenter was Minneapolis Fed President Narayana Kocherlakota, a dovish member who wanted QE to continue until inflation is higher.
The Federal Reserve building.
Getty Images
The Federal Reserve building.
Markets showed a mildly negative reaction to the minutes, with the S&P 500 stock index edging lower. That was a contrast to October, when the Fed released the September meetings and stocks rose 1.75 percent for the day. That was followed the day after by a 2.1 percent decline.
Kocherlakota spoke for nervous doves on the committee when he offered the lone dissent to the Fed statement. He was in favor of continuing QE even though the program has expanded the central bank balance sheet past the $4.5 trillion mark and has sparked concern over market bubbles and potential inflation ahead.
Read MoreMarkets, economy don't need QE: Schwab strategist
"Mr. Kocherlakota dissented because he believed that, in light of continued sluggishness in the inflation outlook and the recent slide in market-based measures of longer-term inflation expectations, the Committee should commit to maintaining the current target range for the federal funds rate at least until projected inflation one to two years ahead has returned to 2 percent," the minutes said.
Members debated adding language to the final statement noting recent developments in the financial markets. October was a highly volatile month, with stocks and bond yields tanking Oct. 15 before battling back. The FOMC ultimately decided against including specific language, though it appears there was considerable discussion.
"Many participants commented on the turbulence in financial markets that occurred in mid-October," the minutes said. "Some participants pointed out that, despite the market volatility, financial conditions remained highly accommodative and that further pockets of turbulence were likely to arise as the start of policy normalization approached."
The Fed had been buying just $15 billion of bonds a month when it decided to pull the plug on the money-printing program. QE was in its third phase, which featured as much as $85 billion in purchases each month before the FOMC voted to begin tapering the program in December 2013.
Read MoreBen Bernanke is a really funny guy. Seriously
"We would have liked to have seen more specifics in terms of a timeline for the first Fed rate increase. But instead we saw, as expected, a more aggressive conversation regarding new and lingering headwinds to that first rate increase," Lindsey Piegza, chief economist at Sterne Agee, told CNBC.
In other discussions, most members indicated they saw the economy growing at a "moderate" pace, while the jobs market had "somewhat" improved. They considered the pace of housing gains to be "slow," however.
Jeff Cox
Finance Editor
Fed wary over global growth, but cheap gas a boon
Business | Updated today at 05:01 AM
WASHINGTON (AFP) - Federal Reserve policymakers saw a potential threat to US growth from the global slowdown and a possible decrease in inflation in their last meeting, according to the minutes published Wednesday.
But they also said the sharp fall in oil prices would likely bring relief to American households and boost overall consumption, supporting the economy.
The solid gains in the labour market underpinned a general sense of confidence at the Oct 28-29 meeting of the Federal Open Market Committee, which took the momentous step of drawing a close to its crisis-era qualitative easing stimulus programme.
The minutes made clear there was little thought of departing from the current policy trajectory, including keeping the benchmark fed funds interest rate at the current zero level well into 2015.
Most analysts forecast initial hikes in around the middle of next year.
But the policymakers appeared sensitive to possible deflationary trends that could be driven by slowdowns in other economies.
"Participants pointed to a somewhat weaker economic outlook and increased downside risks in Europe, China, and Japan, as well as to the strengthening of the dollar," the minutes said.
"It was observed that if foreign economic or financial conditions deteriorated further, US economic growth over the medium term might be slower than currently expected."
The FOMC staff, meanwhile, saw more downside risk to growth due to trends outside the country, and judged that "neither monetary policy nor fiscal policy appeared well positioned to help the economy withstand adverse shocks."
However, the minutes noted that "many participants" saw the effects of slower growth abroad on the US economy "as likely to be quite limited."
For one, they noted that foreign trade's impact on overall US economic growth is "relatively small" and that the stronger dollar has only a modest impact on US exports.
In addition, the fall in commodity prices including energy would be good for growth, and leave the domestic recovery "on a firm footing."
Many of those at the meeting "judged that the recent significant decline in energy prices would provide a boost to consumer spending over the near term, with several of them noting that the drop in gasoline prices would benefit lower-income households in particular", the minutes said.
The record of the meeting confirmed the turn in the view of the FOMC, led by Fed chairman Janet Yellen, that the jobs market is tightening.
Since taking the helm of the Fed in February, Dr Yellen has highlighted the chronic slack in the jobs sector even as the unemployment rate has fallen to 5.8 per cent.
"Fed officials are reasonably confident that labour market improvement will continue but remain unsure about the inflation outlook," said Mr Jim O'Sullivan, chief US economist at High Frequency Economics.
"They remained wary about sending a tightening signal too soon."
US economy grew robust 3.9 per cent in third quarter
Published on Nov 26, 2014 12:34 AM
A woman walks with her shopping bag in New York this week. The US economy grew at a robust 3.9 per cent pace in the third quarter, stronger than previously estimated as business investment and consumer spending picked up, the Commerce Department said. -- PHOTO: AFP
WASHINGTON (AFP) - Growth in the US economy in the third quarter was far stronger than thought, official data showed on Tuesday, further distancing the United States from the ailing eurozone and Japan.
The world's largest economy clocked a 3.9 per cent annual growth rate in the July-September period, the Commerce Department said, revising its initial estimate of 3.5 per cent last month.
The number was well above expectations. Economists had predicted a downward revision in the second official estimate for the quarter, to 3.2 per cent.
The momentum came on the heels of a 4.6 per cent expansion in gross domestic product in the second quarter as the economy rebounded from a 2.1 per cent contraction in the first three months of the year largely reflecting severe winter weather.
The back-to-back quarterly growth means "the US has undergone its strongest growth phase for 11 years", said Chris Williamson, chief economist at Markit.
The United States is a bright spot in the slowing global economy, with the 18-nation eurozone stalling and Japan, the third-largest economy, falling into recession, and China and other emerging-market economies experiencing easing momentum.
The European Central Bank and the Bank of Japan are ratcheting up stimulus measures just as the Federal Reserve is withdrawing them, announcing the end of quantitative easing in October.
The Fed is expected to raise its near-zero interest rate in mid-2015, the first increase in the federal funds rate in more than six years, if the economy continues to improve.
"Such buoyant growth will inevitably raise expectations that the Fed could soon start to raise interest rates, possibly in the first half of 2015," Williamson said.
Contributing to the improved third-quarter GDP number was an upward revision to business inventory investment, up 7.1 per cent, especially in the wholesale trade and retail trade sectors.
Consumer spending, which accounts for about two-thirds of US GDP, increased 2.2 per cent instead of the 1.8 per cent prior estimate. The increase was primarily due to spending on goods.
Partly offsetting the upward revisions, based on data that was not available for the first estimate, exports were revised lower and imports were revised higher. The widening in the trade deficit was expected given the slowdown in trading partners and a stronger dollar.
Inflation remained subdued. The Fed's preferred inflation measure, the personal consumption expenditures price index, rose 1.3 per cent in the third quarter, an upward revision of 0.1 percentage point. Stripping out volatile food and energy prices, core PCE prices were up 1.4 percent.
The White House and economists voiced caution about the outlook despite the better GDP numbers.
"Since the financial crisis, the US economy has bounced back more strongly than most others around the world, and the recent data highlight that the United States is continuing to lead the global recovery," said Jason Furman, President Barack Obama's chief economic adviser.
"Nevertheless, there is more work to be done to boost growth in the United States and around the world," he said, calling on Congress, which will be controlled by opposition Republicans next year, to take "important steps like increased infrastructure investment".
Barclays analyst Michael Gapen said that "although the details of this report are more positive, on net, relative to the advance release, we are not inclined to extrapolate the stronger growth into future quarters".
"Without a persistent acceleration in private consumption, it is hard for overall GDP growth to accelerate," he said.
Rob Carnell at ING Bank warned that "a lot can happen between now and the April 2015 rate hike the market is pricing in, including much weaker inflation and a possible re-run of the 2013 government shutdown, and we are taking nothing for granted".
The Commerce Department will publish its third and final estimate of third-quarter GDP growth on December 23.