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According to the advance estimate, real GDP increased at an annualized rate of 2.8 percent in the third quarter, following a 2.5 percent increase in the second quarter. Over the last four quarters, real GDP has increased 1.6 percent. Contributions to the third quarter increase in GDP came from consumption, residential and business fixed investment, inventories, exports, and state and local government spending. These contributions were partially offset by an increase in imports and a decline in federal government spending.
Personal consumption expenditures increased 1.5 percent during the quarter, contributing 1.0 percentage point to GDP growth. The improvement in overall consumption was primarily driven by increases in both durable and nondurable goods consumption, which increased 7.8 and 2.7 percent, respectively. Services consumption remained essentially flat, increasing just 0.1 percent.
Residential investment increased 14.6 percent in the third quarter, matching a similar gain in the previous quarter. This contributed 0.4 percentage points to overall GDP growth. Business fixed investment increased 1.6 percent, as a 12.3 percent increase in structures and a 2.2 percent increase in intellectual property was offset by a 3.7 percent decline in equipment. Business fixed investment contributed 0.2 percentage point while inventory investment contributed 0.8 percentage point to the third quarter improvement in GDP.
Exports increased 4.5 percent and imports increased 1.9 percent, leading to a slight reduction in the trade deficit during the quarter. This reduction led to a positive contribution from net exports to GDP growth of 0.3 percentage point. Federal government spending continued to decline, falling 1.7 percent. However, this was offset by an increase in state and local government spending of 1.5 percent. The net result was a slightly positive contribution (0.04 percentage point) to GDP growth from government spending.