Economics & Country Risk Blog

Real GDP Tracker and the impact of Hurricane Harvey

As of 28 August 2017, IHS Markit estimates that real US GDP will increase at a 3.5% annual rate in the third quarter. This rate exceeds the prediction in our latest US macro forecast, released on 10 August. Our outlook has been revised upward due to a number of factors and data releases. The second-quarter advance quarterly services survey showed robust revenues for services industries in the second quarter, while weaker-than-expected consumer price growth in July means that consumer spending will likely get a lift. There was also good news on the housing front, as more construction than expected began on single-family homes. But the biggest news came from the July retail sales report, which was unqualifiedly strong as consumers came out swinging. In short, incoming data suggests a strong rate of growth in the third quarter of 2017 - perhaps the best since mid-2014. The second quarter is looking stronger than before, too; our current thinking on the second estimate of real GDP growth in the second quarter is that an upward revision to 3.1% is likely. Meanwhile, our forecast for real consumer spending growth currently stands at a 3.0% rate for the third quarter – also a hike from the 2.6% rate in our August forecast.

These estimates did not include any impact from Hurricane Harvey, which made landfall in Texas on 25 August. The storm has already demolished records for rainfall over the Houston area. Although we are still assessing the economic impact, the hurricane's toll on third-quarter economic growth is not likely to be enormous. While locally devastating, the geographic impact of the flooding has been fairly concentrated. Second, GDP - the yardstick used to measure growth – measures production, not destruction. Hurricanes discourage some types of production; people cannot work during a storm and its aftermath, for example. But homes will need to be rebuilt or repaired after the storm, which will add to GDP. While the disaster undoubtedly will mean major disruption to the lives of many Americans, the nation as a whole is still likely to enjoy a robust quarter of economic growth.

Chris G. Christopher, Jr. is the Executive Director of US Macro, Global Economics, and Consumer Markets for IHS Markit.
Posted 29 August 2017

About The Author

Executive Director of US Macro, Global Economics, and Consumer Markets

Dr. Chris G. Christopher, Jr. is Executive Director in the US Macro, Global Economics, and Consumer Economics for IHS Markit. He brings over 25 years of experience as an economist, academic, forecaster, and  demographer. Prior to joining IHS, Christopher worked for FedEx Services in the forecasting department and as the Chief Econometrician for OIT. In addition, he worked as a research economist at Regional Economic Models, Inc. (REMI); the New York State Legislative Tax Study Commission; and as an associate professor, administrator, and university lecturer in econometrics, economics, and business. Christopher holds a Bachelor of Arts in economics and political science, Master of Arts in economics, Master of Arts in mathematics, Doctorate of Philosophy in economics from the University at Albany. Dr. Christopher has taught graduate and undergraduate courses at various business schools and economics departments.

Dr. Christopher writes a quarterly column for CSCMP’s Supply Chain Quarterly, has several academic publications, and writes perspective pieces for the mass media. He is a member of the Econometric Society, American Economic Association, and National Association of Business Economists (NABE). Chris is on the board of economic advisors for the New York State Assembly, and a member of the NABE Travel & Transportation Roundtable. In addition, Chris is a NABE Certified Business Economist (CBE), and Consensus Economics 2013 forecast accuracy award winner (US GDP & CPI).