At 8:30 a.m. this morning, the Bureau of Economic Analysis (BEA) reported that real gross domestic product (GDP) rose at a seasonally adjusted annualized rate of 2.5% during the 3rd-quarter of 2011. Despite the improvement in quarterly annualized growth, real GDP has risen by only 1.6% over the past year – the same year-over-year reading as in the 2nd – quarter.

The largest contributors to the growth in real GDP in the 3rd-quarter were: consumer spending (PCE) added 1.7 points, private nonresidential fixed investment added 1.5 points, and exports contributed 0.6 points. The largest subtractions from real GDP were: the change in private inventories -1.1 points and imports -0.3 points.

Perhaps the most encouraging aspect of today’s report was the 16.3% annualized increase in real private nonresidential fixed investment (i.e., business investment in buildings, equipment, and software). This key element has been largely absent from the recovery.

See full staff commentary attached below: