Q3 GDP Report: Not Good, Not Bad

U.S. gross domestic product (GDP) rose 2% in the third quarter, the best performance in a year, but well below the 2.5% seen in the initial reading, according to the Commerce Department. Economists were expecting a revised reading of 2.3%. “The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and federal government spending that were partly offset by negative contributions from private inventory investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased,” according to the Bureau of Economic Analysis (BEA). BEA data show final sales of computers added 0.22 percentage point to the third-quarter change in real GDP after adding 0.07 percentage point to the second-quarter change. Motor vehicle output added 0.18 percentage point to the third-quarter change in real GDP after subtracting 0.10 percentage point from the second-quarter change. The Commerce Department added that consumer spending showed a 2.3% increase for the quarter, not 2.4% as originally estimated. The downward GDP revision of 0.5% is equivalent to $15 billion. Taxes on corporate income decreased $5.6 billion in the third quarter, compared with a decrease of $1.8 billion in the second quarter, BEA said.