3rd Q GDP Revised Sharply Higher

Third-quarter GDP was revised sharply higher to plus 5.0 percent for the strongest rate since way back in third-quarter 2003. Today's second revision, up 1.1 percent from the first revision and compared to plus 4.6 percent for the second quarter, reflects gains for health care, recreation, financial services, and software. Final sales were also revised sharply higher, to plus 5.0 vs a prior reading of 4.1 percent. GDP prices remain soft at plus 1.4 percent in a reading that is likely to ebb further given this quarter's drop in oil prices. Today's results point to unexpectedly strong economic momentum going into the current quarter.

Recent History Of This Indicator:
GDP grew 3.9 percent in the third quarter versus the advance estimate of 3.5 percent. Growth still decelerated from the second quarter weather rebound of 4.6 percent annualized. With the second estimate for the third quarter, private inventory investment decreased less than previously estimated, and both personal consumption expenditures (PCE) and nonresidential fixed investment increased more. In contrast, exports increased less than previously estimated. On the price front, the chain-weighted price index was revised up marginally to 1.4 percent, compared to the advance estimate of 1.3 percent annualized from 2.1 percent in the second quarter. The core chain index, excluding food and energy, eased to 1.7 percent but was slightly higher than the initial estimate of 1.6 percent.