Third quarter GDP growth comes in at 3.5%

While a positive number was expected, let’s wait to crunch the numbers before we pop the cork on the Moet – the price index was only 0.8% versus an expected 1.4%. So I will want to see what is happening with nominal GDP.  I also want to see how inventories look given the huge purges in inventories we saw in Q1 and Q2.

Notice that personal income was down but personal outcome was up because the savings rate decreased in Q3; this gives further support to my contention that consumers are not deleveraging.

I may have more to say about this in another post later today

For the time being, here are excerpts of the BEA press release (emphasis now added):

GROSS DOMESTIC PRODUCT:  THIRD QUARTER 2009 (ADVANCE ESTIMATE)

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 3.5 percent in the third quarter of 2009, (that is, from the second quarter to the third quarter), according to the "advance" estimate released by the Bureau of Economic Analysis.  In the second quarter, real GDP decreased 0.7 percent.

The Bureau emphasized that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 5).  The “second" estimate for the third quarter, based on more complete data, will be released on November 24, 2009.

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment.  Imports, which are a subtraction in the calculation of GDP, increased.

The upturn in real GDP in the third quarter primarily reflected upturns in PCE, in private inventory investment, in exports, and in residential fixed investment and a smaller decrease in nonresidential fixed investment that were partly offset by an upturn in imports, a downturn in state and local government spending, and a deceleration in federal government spending.

Motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change.  Final sales of computers subtracted 0.11 percentage point from the third-quarter change in real GDP after subtracting 0.04 percentage point from the second-quarter change…

Real personal consumption expenditures increased 3.4 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second.  Durable goods increased 22.3 percent, in contrast to a decrease of 5.6 percentThe third-quarter increase largely reflected motor vehicle purchases under the Consumer Assistance to Recycle and Save Act of 2009 (popularly called, “Cash for Clunkers” Program). Nondurable goods increased 2.0 percent in the third quarter, in contrast to a decrease of 1.9 percent in the second.  Services increased 1.2 percent, compared with an increase of 0.2 percent.

Real nonresidential fixed investment decreased 2.5 percent in the third quarter, compared with a decrease of 9.6 percent in the second.  Nonresidential structures decreased 9.0 percent, compared with a decrease of 17.3 percent.  Equipment and software increased 1.1 percent, in contrast to a decrease of 4.9 percent.  Real residential fixed investment increased 23.4 percent, in contrast to a decrease of 23.3 percent.

Real exports of goods and services increased 14.7 percent in the third quarter, in contrast to a decrease of 4.1 percent in the second.  Real imports of goods and services increased 16.4 percent, in contrast to a decrease of 14.7 percent.

The change in real private inventories added 0.94 percentage point to the third-quarter change in real GDP after subtracting 1.42 percentage points from the second-quarter change.  Private businesses decreased inventories $130.8 billion in the third quarter, following decreases of $160.2 billion in the second quarter and $113.9 billion in the first…

Disposition of personal income

Current-dollar personal income decreased $15.5 billion (0.5 percent) in the third quarter, in contrast to an increase of $19.1 billion (0.6 percent) in the second…

Disposable personal income decreased $20.4 billion (0.7 percent) in the third quarter, in contrast to an increase of $138.2 billion (5.2 percent) in the second.  Real disposable personal income decreased 3.4 percent, in contrast to an increase of 3.8 percent.

Personal outlays increased $148.2 billion (5.8 percent) in the third quarter, compared with an increase of $8.2 billion (0.3 percent) in the second.  Personal saving — disposable personal income less personal outlays — was $364.6 billion in the third quarter, compared with $533.1 billion in the second. The personal saving rate — saving as a percentage of disposable personal income — was 3.3 percent in the third quarter, compared with 4.9 percent in the second.  For a comparison of personal saving in BEA’s national income and product accounts with personal saving in the Federal Reserve Board’s flow of funds accounts and data on changes in net worth, go to http://www.bea.gov/national/nipaweb/Nipa-Frb.asp

4 Comments
  1. Anonymous says

    Ed, if you believe consumers are not deleveraging, how does that square off with the fact that we currently have unsustainable high personal debt levels? These debt levels can only be sustained for so long. In my view, the day of reckoning is here in that available credit is re-callibrating to equilibrium levels (levels that are more sustainable). This re-callibration is forcing consumers to pay down their debt. Banks are no longer lending as recklessly, homes are no longer the forever-appreciating ATM machines they once were. So in my opinion, deleveraging is real and ongoing. I look forward to your post that argues against deleveraging. Keep up the good articles. Thanks

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