United States: Economic growth picks up in Q3
November 7, 2013
In the third quarter, GDP expanded at a seasonally adjusted annualized rate (SAAR) of 2.8%, according to the advance estimate released by the Bureau of Economic Analysis (BEA) on 7 November. The print marked an improvement relative to the revised 2.5% growth recorded in the first quarter (previously reported: +1.7%) and was above FocusEconomics panelists' expectations of a 2.1% rise. The third quarter expansion mainly reflects inventory restocking and an improvement in the external sector.
On the domestic side, non-residential fixed investment tumbled from a 4.7% expansion in the second quarter to a 1.6% increase in the third. In contrast, business inventories grew 0.8% in Q3, which doubled the 0.4% growth tallied in Q2. Residential fixed investment also strengthened, increasing from 14.2% in Q2 to 14.6% in Q3, which suggests continuing recovery in the housing sector. Government spending rebounded from a 0.4% contraction to 0.2% growth. This result, however, was driven by state and local spending, as many federal spending cuts remain in place. Private consumption rose 1.5%; this figure was down from the 1.8% increase registered in the previous period.
Exports expanded 4.6% in the third quarter (Q2: +8.0% SAAR) and imports increased 1.8% (Q2: +6.9% SAAR). Consequently, the external sector's net contribution to overall growth rebounded from minus 0.1 percentage points in the second quarter to plus 0.3 percentage points in the third.
The Federal Reserve expects economic growth to range between 2.0% and 2.3% in 2013 and to accelerate to between 2.9% and 3.1% in 2014. FocusEconomics Consensus Forecast panelists are less optimistic than the Fed and expect GDP to expand 1.6% in 2013, which is down 0.1 percentage points from last month's forecast. For 2014, the panel expects the economy to expand 2.7%, which is unchanged from last month's projection.
Author: Carl Kelly, Economist