Q3 GDP Revised Up to a 2.5% Pace

The U.S. economy expanded at a stronger pace in the third quarter than initially estimated, the Bureau of Economic Analysis (BEA) reports. The inflation-adjusted output of the nation’s goods and services rose at an annual rate of 2.5% for the three months through October, up from the 2.0% pace originally estimated for Q3. That puts a bit more distance over the second quarter’s lesser 1.7% gain.

What’s behind the rise? BEA explains…

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, nonresidential fixed investment, exports, and federal government spending that were partly offset by a negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the third quarter primarily reflected a sharp deceleration in imports and accelerations in private inventory investment and in PCE that were partly offset by a downturn in residential fixed investment and decelerations in nonresidential fixed investment and in exports.

The 2.5% rise in Q3 GDP is a bit more than the 2.4% expected via the consensus outlook for economists, according to Briefing.com.

Personal consumption expenditures rose by 2.8% in the revised figures for Q3, up from 2.2% originally reported. That’s the strongest quarterly increase since Q4 2006. The robust pace of consumption throws cold water on the fear, at least for the moment, that consumer spending is set to give way in the face of sharply higher savings. Indeed, durable goods spending—the most cyclically sensitive portion of consumption—rose by 7.4% in Q3, according to today’s update. That’s up from a strong 6.8% rate in Q2. And with signs that holiday spending could rise modestly over last year’s level, rumors that Joe Sixpack’s profligate ways are at death’s door may be premature…again.

About James Picerno 894 Articles

James Picerno is a financial journalist who has been writing about finance and investment theory for more than twenty years. He writes for trade magazines read by financial professionals and financial advisers.

Over the years, he’s written for the Wall Street Journal, Barron’s, Bloomberg, Dow Jones, Reuters.

Visit: The Capital Spectator

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