BEA Reports 2.6% Growth in Real GDP in Q3

After dipping in the first and second quarters, real gross domestic product (GDP) rose at an annual rate of 2.6% in the third quarter, according to an “advance” estimate released by the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA).

The increase in real GDP was driven by higher exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending, BEA said Thursday (Oct. 27) in a press release.

It was also helped by a decrease in imports, which subtract from GDP, according to the release.

Those factors boosting GDP were partly offset by declines in residential fixed investment and private inventory investment, the release stated.

“The upturn primarily reflected a smaller decrease in private inventory investment, an acceleration in nonresidential fixed investment, and an upturn in federal government spending that were partly offset by a larger decrease in residential fixed investment and a deceleration in consumer spending,” BEA said in the release.

The decrease in private inventory investment primarily reflected a drop in retail trade, while the acceleration in nonresidential fixed investment was driven by increases in equipment and intellectual property products. The upturn in federal government spending was led by defense spending, according to the release.

Among the factors that partly offset the rise in GDP were drops in single-family housing construction and brokers’ commissions that caused the larger decrease in residential fixed investment, the release stated.

While consumer spending rose, its rate of increase slowed, primarily due to declining sales of motor vehicles and parts as well as food and beverages, per the release.

This “advance” GDP estimate may be revised; a “second” estimate that will be based on more complete data is to be released Nov. 30, BEA said in the release.

This quarter’s increase reversed the declines that were recorded in the previous two quarters, where real GDP decreased at an annual rate of 0.6% in the second quarter and 1.6% in the first quarter.

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