The release of third-quarter GDP data from the US and UK revealed mixed fortunes yesterday. In the UK we saw the economy grow for the 7th consecutive quarter. The headline rate, however, was revised to an annualised 2.6% from 3.0%. The highest increase in consumer spending for 4 years accounted for almost all of the economic growth, with net imports, along with a reduction in business investment, negatively impacting the overall figure. 

In the US meanwhile, we saw an upward revision to third-quarter GDP, which grew at an annualised rate of 5% compared to previous expectations of 3.9%. As in the UK, consumer spending, which accounts for circa two-thirds of the US economy, was the main driver behind the increase in economic activity, rising at an annual rate of 3.2% against the previous estimate of 2.2%. Consumers have increased spending power due to the lower oil price, which has continued into the fourth quarter, along with greater job security as the unemployment rate continues to fall. 

Should we start to see wage inflation in the US in the new year and the oil price steadies, the Federal Reserve may be the first of the two nations to raise rates.