United States: Economy grows at a healthy pace in Q3
October 30, 2014
In the third quarter, GDP expanded at a seasonally adjusted annualized rate (SAAR) of 3.5%, according to the advance estimate released by the Bureau of Economic Analysis (BEA) on 30 October. The print came in below the 4.6% expansion recorded in the second quarter but beat market expectations of a 3.0% increase. The growth primarily reflects a jump in government spending and a strong external sector.
On the domestic side, government spending expanded 4.6% in Q3, which was up from the 1.7% increase tallied in Q2 and marked the highest rate in more than five years. In contrast, private consumption decelerated from a 2.5% expansion in Q2 to a 1.8% increase in Q3. Non-residential fixed investment fell from a 9.7% rise in Q2 to a 5.5% increase in Q3. Residential fixed investment growth dropped to a 1.9% rise in Q3 (Q2: +8.8% quarter-on-quarter SAAR). Business inventories were also a drag on growth.
Exports growth increased 7.8% in the third quarter (Q2: +11.0% qoq SAAR) and imports decreased 1.7% (Q2: +11.3% qoq SAAR). Consequently, the external sector’s net contribution to overall growth improved from minus 0.3 percentage points in the second quarter to plus 1.3 percentage points in the third.
Author: Carl Kelly, Economist