Final sales of domestic product increased a healthy 4.2 percent after gaining 3.2 percent in the second quarter. Final sales to domestic purchasers rose 2.7 percent in the third quarter, compared to 3.4 percent in the second quarter.
The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.
GDP data are still being affected by the atypically severe winter weather in the first quarter as the third quarter returns to normal conditions after a second quarter recovery. The notable negative for the third quarter was a drop in inventory investment and a slowdown in consumer spending growth. Both were strong in the second quarter. The deceleration in the percent change in real GDP reflected a downturn in private inventory investment and decelerations in PCE, in nonresidential fixed investment, in exports, in state and local government spending, and in residential fixed investment that were partly offset by a downturn in imports and an upturn in federal government spending.
On the price front, the chain-weighted price index decelerated to 1.3 percent annualized from 2.1 percent in the second quarter. Analysts projected 1.4 percent. The core chain index, excluding food and energy, eased to 1.6 percent from 1.8 percent in the second quarter.
Overall, economic growth is somewhat better than expected. This is good news for company profits as reflected in recently better-than-expected earnings on average. But the third quarter GDP figure will raise debate within the Fed on moving forward or not the first increase in the fed funds rate.
Recent History Of This Indicator:
GDP growth for the final revision to second quarter GDP showed an upward revision to 4.6 percent from the prior estimate of 4.2 percent and compared to the first quarter decline of 2.1 percent. The latest second quarter number is the fastest growth rate since the fourth quarter of 2011-also 4.6 percent. Upward revisions primarily came from nonresidential fixed investment, residential investment, and exports. Broad demand numbers also were revised up. Final sales of domestic product were boosted to 3.2 percent, compared to the second estimate of 2.8 percent and a first quarter decline of 1.0 percent. Final sales to domestic purchasers (which exclude net exports) increased to 3.4 percent, compared to the second estimate of 3.1 percent and a first quarter rise of 0.7 percent. Chain-weighted prices advanced 2.1 percent annualized, equaling the prior estimate and forecasts and compared to the first quarter number of 1.3 percent.
GDP growth for the final revision to second quarter GDP showed an upward revision to 4.6 percent from the prior estimate of 4.2 percent and compared to the first quarter decline of 2.1 percent. The latest second quarter number is the fastest growth rate since the fourth quarter of 2011-also 4.6 percent. Upward revisions primarily came from nonresidential fixed investment, residential investment, and exports. Broad demand numbers also were revised up. Final sales of domestic product were boosted to 3.2 percent, compared to the second estimate of 2.8 percent and a first quarter decline of 1.0 percent. Final sales to domestic purchasers (which exclude net exports) increased to 3.4 percent, compared to the second estimate of 3.1 percent and a first quarter rise of 0.7 percent. Chain-weighted prices advanced 2.1 percent annualized, equaling the prior estimate and forecasts and compared to the first quarter number of 1.3 percent.
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