3Q GDP Advance Estimate Slows to 1.9%
Real gross domestic product increased at an annual rate of 1.9 percent in the third quarter, marking a continued trend of slowing economic growth, the Bureau of Economic Analysis reported in its first (advance) estimate yesterday.
In the second quarter, real GDP increased by 2.0 percent. The GDP estimate is based on source data that are incomplete or subject to further revision by the source agency.
BEA said the increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures, federal government spending, residential fixed investment, state and local government spending and exports that were partly offset by negative contributions from nonresidential fixed investment and private inventory investment. Imports, a subtraction in the calculation of GDP, increased.
Deceleration in real GDP in the third quarter reflected slowing in PCE, federal government spending, state and local government spending and a larger decrease in nonresidential fixed investment. These were partly offset by a smaller decrease in private inventory investment and upturns in exports and in residential fixed investment.
Sam Bullard, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said as business investment continues to struggle amid the headwinds of soft global demand and trade war tensions, the resilience of consumer spending continues to underpin GDP growth.
“Consumer fundamentals remain healthy, thereby allowing the sector to continue to support the U.S. economic expansion in coming quarters,” Bullard said. “Looking ahead, the dichotomy between consumers and businesses is likely to continue. As such, GDP growth prospects should remain contained at around a 2% pace, on average, over the next few quarters.”
The report said current-dollar personal income increased by $172.8 billion in the third quarter, compared to an increase of $244.2 billion in the second quarter. The deceleration reflected a downturn in personal income receipts on assets and decelerations in compensation and in personal current transfer receipts that were partly offset by an acceleration in proprietors’ income. Disposable personal income increased by $181.7 billion, or 4.5 percent, in the third quarter, compared to an increase of $192.6 billion, or 4.8 percent, in the second quarter.
BEA said personal savings rose to $1.34 trillion in the third quarter, compared to $1.32 trillion in the second quarter. The personal saving rate–personal saving as a percentage of disposable personal income–was 8.1 percent in the third quarter, compared to 8.0 percent in the second quarter.