NEW YORK – The U.S. economy’s third-quarter growth was revised slightly downward on lower contributions from consumer spending and trade, though the pace remained the fastest since early 2015, Commerce Department data showed Thursday.
Highlights of third-quarter GDP (Third estimate)
- Gross domestic product grew at 3.2 percent annualized rate (est. 3.3 percent), revised from 3.3 percent and following 3.1 percent in 2Q
- Consumer spending, biggest part of the economy, grew 2.2 percent (est. 2.3 percent), revised from 2.3 percent and following 3.3 percent in 2Q
- Business equipment investment revised to 10.8 percent gain from 10.4 percent; intellectual property spending advance revised to 5.2 percent from 5.8 perecent
- Gross domestic income gain revised to 2 percent from 2.5 percent
Key Takeaways
The revisions for GDP, the value of all goods and services produced, still show the economy was on a strong run last quarter, with recent reports indicating the momentum extended into the current period. While the tax overhaul ready for President Donald Trump’s signature may give a boost in the coming year, economists say his goal of 3 percent sustained annual growth remains a challenge.
The lower reading on consumer spending, which accounts for about 70 percent of the economy, reflected data on recreation services and airline passenger revenue, according to the report. Business investment was robust in the quarter, with revisions to components ultimately amounting to a wash compared with the previous report.
State and local government spending was revised to an increase of 0.2 percent, reflecting construction data, from a prior report of a 0.1 percent drop. The average of GDP and GDI was revised to a 2.6 percent advance, from a previously estimated 2.9 percent gain.
Other Details
- Net exports added 0.36 percentage point to growth, revised down from 0.43 point; inventories added 0.79 point, little changed from the previously reported 0.8 point
- Corporate pretax earnings rose 5.3 percent from a year earlier, revised from 5.4 percent gain Nonresidential fixed investment – which includes spending on equipment, structures and intellectual property – increased an unrevised 4.7 percent
- Residential investment fell at a 4.7 percent rate, revised from 5.1 percent decline
- Stripping out trade and inventories – the two most volatile components of the GDP calculation – final sales to domestic purchasers climbed 1.9 percent, revised from 2 percent
- Core PCE price index rose at 1.3 percent rate, revised from 1.4 percent; Federal Reserve targets 2 percent inflation for headline PCE
- GDP report is the third of three estimates for the quarter; fourth-quarter figures are due Jan. 26
Shobhana Chandra is a reporter for Bloomberg News.
