The second estimate of Q3 U.S. GDP by the Bureau of Economic Analysis is out.
GDP growth was 3.6% at an annualized pace in the third quarter, way above the BEA’s preliminary estimate of 2.8% and above Wall Street’s consensus estimate of 3.1%.
Personal consumption growth came in at 1.4%, below the preliminary estimate of 1.5%.
The GDP price index was 2.0%, above the preliminary estimate of 1.9%, and core PCE was 1.5%, slightly higher than the preliminary estimate of 1.4%.
However, the big story was the upward revision in inventories.
Inventories increased $US116.5 billion according to the second estimate, contributing 1.7 percentage points to the headline number, up from an initial estimate of $US86 billion, which had contributed 0.8 percentage points to the initial 2.8% GDP growth estimate.
Below is a breakdown of the data from the release:
Real gross domestic product — the output of goods and services produced by labour and property located in the United States — increased at an annual rate of 3.6 per cent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.5 per cent.
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.8 per cent (see “Revisions” on page 3). With this second estimate for the third quarter, the increase in private inventory investment was larger than previously estimated.
The increase in real GDP in the third quarter primarily reflected positive contributions from private inventory investment, personal consumption expenditures (PCE), exports, nonresidential fixed investment, residential fixed investment, and state and local government spending that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP growth in the third quarter primarily reflected an acceleration in private inventory investment, a deceleration in imports, and an acceleration in state and local government spending that were partly offset by decelerations in exports, in PCE, and in nonresidential fixed investment.
Stock and bond futures are down in the wake of the release.
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