The Bureau of Economic Analysis (BEA) released its “preliminary” estimate of 4.9% annualized growth in the inflation-adjusted (“real”) gross domestic product (GDP) for the 3rd quarter (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm). The 3rd-quarter growth rate was revised up from the earlier, “advance,” estimate of 3.9%. Real GDP grew at a 3.8% rate in the 2nd quarter of this year.

Highlights of today’s GDP report:

• The upward revision to GDP growth reflected updated data received by BEA that revealed greater increases in inventory investment and net exports than had been previously estimated.

• The increase in real GDP in the 3rd quarter primarily reflected consumer spending (which grew 2.7%), exports (which grew 18.9%), federal government spending (which grew 7.0%), business investment spending (which grew 9.4%), and inventory investment (which added 0.98 percentage point to the 3rd quarter change in real GDP).

• Partly offsetting the factors that contributed positively to real GDP growth were a decline in residential investment (which decreased 19.7%, compared with a decrease of 11.8% in the 2nd quarter) and an increase in imports (imports, which grew 4.3%, are a subtraction from GDP).

• The decline in residential investment in the 3rd quarter shaved 1.03% off of real GDP growth.

• Residential investment has declined for seven consecutive quarters, reducing real GDP growth over that period by an average of 0.82 percentage point.

• There have been 24 consecutive quarters of expansion of the Nation’s GDP, with growth averaging more than 2.8% over that period.

• Real GDP growth has averaged 2.9% over the past four quarters.

• Corporate profits in the 3rd quarter increased 1.9% from the same quarter a year ago. Net profits earned abroad increased 35%, while domestic profits declined 4%.





Jeffrey Wrase
Chief Economist, Senate Republicans
jeff_wrase@jec.senate.gov