United States: Economic growth in Q3 revised upward, exceeds projection
December 5, 2013
In the third quarter, GDP expanded at a seasonally adjusted annualised rate (SAAR) of 3.6%, according to the second estimate released by the Bureau of Economic Analysis (BEA) on 5 December. The print marked an improvement relative to the 2.8% reading issued in the advance estimate and overshot market expectations of 3.1% growth. The revised third quarter reading mainly reflected a larger increase than initially reported in inventory restocking and stronger growth in non-residential fixed investment.
On the domestic side of the economy, non-residential fixed investment rose 3.5% (advance estimate: +1.6% quarter-on-quarter SAAR). Moreover, business inventories grew 1.6%, which was significantly higher than both the 0.4% growth tallied in Q2 and the 0.8% growth originally reported. Private consumption rose 1.4%, which was down slightly from the 1.5% expansion reported in the advance estimate and marked the lowest level since June 2009. Meanwhile, government spending increased 0.4% in the third quarter (advance estimate: +0.2% qoq SAAR).
On the external front, exports were revised downward and imports were revised upward compared to the advance estimate. According to the second estimate, exports rose 3.7% in the third quarter (advance estimate: +4.6% qoq SAAR), while imports increased 2.7% (advance estimate: +1.8% qoq SAAR). Despite the revisions, the external sector's net contribution to overall growth held steady at plus 0.3 percentage points.
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