Economy Watch: GDP Growth Jumps in 3Q

The Bureau of Economic Analysis' final estimate for third-quarter U.S. GDP growth was revised up to 3.5 percent, a considerable improvement from the final second-quarter estimate.
Source: Bureau of Economic Analysis

Source: Bureau of Economic Analysis

The Bureau of Economic Analysis released its final estimate on Thursday for the growth of U.S. GDP during the third quarter, putting it at an annualized rate of 3.5 percent (compared with 3.2 percent for the previous estimate). The revised number also marks a considerable improvement compared with the final estimate for the second quarter, which saw an annualized increase of 1.4 percent.

In the third estimate for the third quarter, nonresidential fixed investment (a part of which is CRE), personal consumption expenditures (PCE, or people spending money), and state and local government spending increased more than previously estimated. Even so, the general picture of economic growth remains about the same, according to the bureau.

The BEA added that the drivers of growth during the third quarter were: an upturn in private inventory investment; an acceleration in exports; a smaller decrease in state and local government spending; an uptick in federal government spending; and a smaller decrease in residential investment. There were some headwinds, however: a smaller increase in PCE, and an acceleration in imports, which counts as a subtraction to GDP.

Separately on Thursday, the BEA reported that U.S. personal income increased $1.6 billion (less than 0.1 percent) in November. PCE was up $24 billion (0.2 percent), and real PCE increased 0.1 percent. These numbers bode reasonably well for growth during the fourth quarter, which will be estimated by the BEA early next year.