US GDP Growth Beats Expectations in Q3


The United States economy advanced an annualized 3.5 percent in the third quarter of 2014, slowing from a 4.6 percent increase in the previous period. Advance estimates showed a downturn in inventory, residential and nonresidential investment and deceleration in personal consumption, exports and state and local public spending.

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.

The deceleration in the percent change in real GDP reflected a downturn in private inventory investment and deceleration in PCE, in nonresidential fixed investment, in exports, in state and local government spending, and in residential fixed investment that were partly offset by a downturn in imports and an upturn in federal government spending.

Real personal consumption expenditures increased 1.8 percent in the third quarter, compared with an increase of 2.5 percent in the second. Durable goods increased 7.2 percent, compared with an increase of 14.1 percent. Nondurable goods increased 1.1 percent, compared with an increase of 2.2 percent. Services increased 1.1 percent, compared with an increase of 0.9 percent.

Real nonresidential fixed investment increased 5.5 percent in the third quarter, compared with an increase of 9.7 percent in the second. Investment in nonresidential structures increased 3.8 percent, compared with an increase of 12.6 percent. Investment in equipment increased 7.2 percent, compared with an increase of 11.2 percent. Investment in intellectual property products increased 4.2 percent, compared with an increase of 5.5 percent. Real residential fixed investment increased 1.8 percent, compared with an increase of 8.8 percent.

Real exports of goods and services increased 7.8 percent in the third quarter, compared with an increase of 11.1 percent in the second. Real imports of goods and services decreased 1.7 percent, in contrast to an increase of 11.3 percent.

Real federal government consumption expenditures and gross investment increased 10.0 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second. National defense increased 16.0 percent, compared with an increase of 0.9 percent. Nondefense increased 0.5 percent, in contrast to a decrease of 3.8 percent. Real state and local government consumption expenditures and gross investment increased 1.3 percent, compared with an increase of 3.4 percent.

The change in real private inventories subtracted 0.57 percentage point from the third-quarter change in real GDP after adding 1.42 percentage points to the second-quarter change. Private businesses increased inventories $62.8 billion in the third quarter, following increases of $84.8 billion in the second quarter and $35.2 billion in the first.

U.S. Commerce Department | Joana Taborda | joana.taborda@tradingeconomics.com
10/30/2014 12:56:58 PM