United States: Upward revised Q3 GDP confirms US economy is pulling ahead while other countries stutter
November 25, 2014
In the third quarter, GDP increased at a seasonally adjusted annualized rate (SAAR) of 3.9%, according to the second estimate released by the Bureau of Economic Analysis (BEA) on 25 November. The print marked an upward revision from the 3.5% expansion reported in the advance estimate and also beat market expectations of a 3.3% increase. The revised third quarter reading mainly reflected that the increases in private consumption and in non-residential fixed investment were greater than initially reported. The US economy has grown more than 3.0% in four of the last five quarters and appears to be on firm ground while worries at the global level are increasing.
On the domestic side of the economy, private consumption rose 2.2%, which was up from the 1.8% growth reported in the advance estimate. Non-residential fixed investment slowed from a 9.7% increase in Q2 to a 7.1% expansion in Q3 (advance estimate: +5.5% quarter-on-quarter SAAR). Meanwhile, residential fixed investment grew 2.7% (advance estimate: +1.9% qoq SAAR). Government spending grew 4.2% in Q3 (advance estimate: +4.6% qoq SAAR). Despite the revision, government spending had not grown this much in more than five years. Moreover, business inventories presented less of a drag on GDP than initially reported.
On the external front, exports were revised down, while imports were revised up. According to the second estimate, exports increased 4.9% in Q3 (advance estimate: +7.8% qoq SAAR). This marked a slowdown from the 11.0% expansion registered in Q2. Imports fell 0.7% in the third quarter (advance estimate: -1.7% qoq SAAR). As a result, the external sector’s net contribution to overall growth was revised down from 1.3 percentage points to 0.8 percentage points.
Author: Carl Kelly, Economist