U.S. GDP Grows at 5.2% Rate in Third Quarter, Stronger Than Expected
The U.S. economy grew at an even stronger pace than previously indicated in the third quarter, according to a report by the Commerce Department on Wednesday. The growth was a result of better-than-expected business investment and stronger government spending.
The Commerce Department’s second estimate showed that gross domestic product, which measures all goods and services produced during the three-month period, accelerated at a 5.2% annualized pace, surpassing the initial 4.9% reading. This growth also exceeded the 5% forecast from economists polled by Dow Jones.
The upward revision primarily came from increases in nonresidential fixed investment, including structures, equipment, and intellectual property. This category showed a rise of 1.3%, although it still marked a sharp downward shift from previous quarters.
Government spending also contributed to the boost in the Q3 estimate, rising 5.5% for the July-through-September period. However, consumer spending saw a downward revision, now rising just 3.6% compared with the initial estimate of 4%.
On the inflation front, there was mixed news. The personal consumption expenditures price index, a gauge closely followed by the Federal Reserve, increased 2.8% for the period, which was a 0.1 percentage point downward revision. However, the chain-weighted price index increased 3.6%, a 0.1 percentage point upward move.
In addition, corporate profits accelerated 4.3% during the period, which was significantly up from the 0.8% gain in the second quarter.
– Nonresidential Fixed Investment and Government Spending Drive GDP Growth
The upward revision in the GDP estimate for the third quarter was primarily due to increases in nonresidential fixed investment, including structures, equipment, and intellectual property. Government spending also contributed to the boost, rising 5.5% for the July-through-September period.
– Mixed News on Inflation and Corporate Profits
The report also brought mixed news on the inflation front. While the personal consumption expenditures price index saw a downward revision, the chain-weighted price index increased. Additionally, corporate profits saw a significant acceleration during the period.
Overall, the revision in the third quarter GDP estimate indicates stronger than expected economic growth, driven by business investment and government spending. This positive outlook could have implications for future economic policy decisions and market expectations.
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