US GDP Growth at 2-Year High


The United States economy expanded an annualized 2.9 percent in the third quarter of 2016, more than 1.4 percent in the previous period and beating market expectations of a 2.5 percent rise, the advance estimate from BEA showed. It is the strongest growth rate since the third quarter of 2014, as exports grew the most in nearly three years boosted by soybeans and inventories recovered while personal consumption slowed.

Personal consumption expenditure (PCE) contributed 1.47 percentage points to growth (2.88 percent in the previous period) and rose 2.1 percent (4.3 percent in the previous period). Spending on both durable goods (9.5 percent compared to 9.8 percent in the previous period) and services (2.1 percent compared to 3 percent in the previous period) increased at a slower pace while spending on durable goods fell 1.4 percent after rising 5.7 percent. 

Fixed investment subtracted 0.09 percentage points from the growth (-0.18 percent in the previous period) and shrank 0.6 percent (-1.1 percent in the previous period). Investment in equipment shrank for the fourth straight quarter (-2.7 percent compared to -2.9 percent); residential declined 6.2 percent (-7.7 percent in the previous period) while investment in structures rebounded (5.4 percent compared to -2.1 percent in the previous period) and rose 4 percent for intellectual property products (9 percent in the previous period).

Private inventories added 0.61 percentage points to growth (-1.16 percentage points in the previous period), the first positive contribution since the first quarter of 2015. Businesses accumulated $12.6 billion worth of inventory, compared to a $9.5 billion loss in the previous period. 

Meanwhile, exports increased 10 percent (1.8 percent in the previous period), the biggest gain since the last quarter of 2013. Imports also increased at a faster 2.3 percent (0.2 percent in the previous period), bringing the impact from trade to 0.83 percent (0.18 percent in the previous period)

Government spending and investment added 0.09 percentage points to growth (-0.3 percent in the previous period) and rose 0.5 percent (-1.7 percent in the previous period). 

US GDP Growth at 2-Year High


BEA | Joana Taborda | joana.taborda@tradingeconomics.com
10/28/2016 1:09:53 PM