Despite recent labor market weakness that has made headlines along with the government shutdown that began Oct. 1 – stalling release of the Commerce Department’s third-quarter gross domestic product readings – there are several signs that point to continued economic vigor through the end of the year.

For example, the Federal Reserve Bank of Atlanta’s real-time gross domestic product growth tracker, GDPNow, is estimating that GDP in the third quarter grew 3.9%, based on currently available economic data. While that estimate likely will change as new data is released, it clearly reflects continued strength.

Consumers once again remain the driving force behind the still-robust economy, opening their wallets more than expected in August, boosting spending on travel, hotels and restaurants. Additionally, second-quarter GDP growth was revised upward from 3.3% to 3.8%, the fastest pace in nearly two years.

Retail sales in August rose more than expected, marking the third consecutive monthly increase.  The existing-home sales report from the National Association of Realtors for the third quarter showed that annualized real residential investment growth increased from -4.6% to -4.4%.   Personal income also rose in August. READ MORE >

The U.S. economy added approximately 22,000 jobs in August, a substantial reduction from recent monthly gains, according to the last employment report from the U.S. Commerce Department before the government shut down that began Oct. 1. Other data collected and studied by a host of private bankers, investors and analysts found that labor weakness continued throughout the third quarter.

In the August government report, the unemployment rate was 4.3%. Economists say the U.S. jobless rate can hold steady even though fewer jobs are added than last year. This is due to more people aging out of the workforce, an increase in discouraged job seekers, a reduced flow of immigrants and rising worker deportations.

Brett Ryan, senior economist at Deutsche Bank, told CNN, “Last year, it probably took about 130,000 jobs per month to keep the unemployment rate steady. This year it’s probably more like 50,000 or below.”

The last national jobless rate reported by Commerce’s Bureau of Labor Statistics is low by historical standards. But Wall Street’s need for quality information beyond the government routinely demands that firms cross-validate data derived from alternative sources. And in September the set of economists and analysts from various investment firms who form the Dow Jones consensus forecast said the labor market will continue slowing with a modest rise in the unemployment rate. READ MORE>

Even though inflation remains above its target, worries about the labor market forced the Federal Reserve Board in late October to approve a quarter-point reduction in the federal funds rate. But Chairman Jerome Powell cast doubt on whether the central bank would approve another rate cut at the Fed’s December meeting. The reduced federal funds rate is 3.75% to 4%.

The Fed said that available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year. The unemployment rate has edged up but remained low through August. Other recent indicators were consistent with these developments, the central bank said, adding that inflation has moved up since earlier in the year and remains somewhat elevated.

Fed policymakers are concerned because the Fed’s two mandates – the maintenance of stable prices and conditions for full employment – are moving in contrary directions and straining the economy. Employment is falling and prices are rising. READ MORE >