GDP Up 3.5%

Gross Domestic Product has been reported to be an unexpectedly high 3.5% in the third quarter (on an annual basis). However the growth was led by a “surprisingly” high increase in defense spending and a reduction in the trade deficit (which accounts for 2% of the 3.5%). The last time defense spending had a surprising increase was the third quarter of 2012 (also a quarter leading up to an election) there was a sharp fall off in defense spending the next quarter. The GDP deflator was 1.3% for the quarter on an annual basis.