Why Trend Growth Is Still 2%

Today's preliminary Q3 GDP number of 3% growth at a QoQ annualized rate has been met with a mix of relief and hope. Relief that one of the most destructive hurricane seasons ever didn't completely sap growth and hope that two consecutive quarters of 3%+ growth is evidence that trend growth has, finally in the 9th year of this recovery, accelerated above 2%. While we are careful to not completely write off the decent number, evidence from two components in particular point to the underlying trend of domestic product growth still being closer to 2% than 3%.