US GDP Growth Slows to 1.5% in Q3

The US economy expanded an annualized 1.5 percent on quarter in the three months to September of 2015, lower than a 3.9 percent expansion in the previous period and below market expectations, according to the advanced estimate released by the Bureau of Economic Analysis. Gains in consumer and business spending were offset by negative contribution from change in private inventories.

Consumer spending expanded at a slower 3.2 percent (3.6 percent in Q2) contributing 2.2 percentage points to overall growth. Expenditure in durable goods (up 6.7 percent from 8 percent in Q2), nondurable (up 3.5 percent from 4.3 percent in Q2) and services (up 2.6 percent from 2.7 percent) eased. 

Fixed investment went up 2.9 percent, slowing from a 5.2 percent rise in Q2 as both nonresidential and residential investment growth slowed. Structure investment shrank 4 percent (+6.2 percent in Q2) and intellectual property/software grew at a slower 1.8 percent (8.3 percent in Q2). In contrast, investment in equipment expanded 5.3 percent (0.3 percent in Q2).

Businesses accumulated only $56.8 billion worth of inventory, the smallest since the first quarter of 2014 and sharply lower from $113.5 billion in Q2. The small inventory buildup subtracted 1.44 percentage points from GDP growth, the largest since the fourth quarter of 2012.

Government spending expanded 1.7 percent (2.6 percent in Q2), boosted by state and local expenditure (2.6 percent from 4.3 percent) while federal edged up 0.2 percent (after being flat in Q2). 

Export growth slowed to 1.9 percent (5.1 percent in Q2) dragged down by strong dollar. The deceleration was offset by a slowdown in imports (1.8 percent vs 3 percent in Q2), leaving the impact from trade on GDP growth neutral.

US GDP Growth Slows to 1.5% in Q3

BEA | Joana Taborda |
10/29/2015 1:24:48 PM