Tuesday, December 23, 2014

Third Quarter GPD Revised Up to 5.0%

Real GDP growth for the third quarter was revised up to 5.0% in the BEA’s final estimate, well above expectations. The upward revision was driven by increases in personal consumption expenditures and nonresidential fixed investment. The acceleration in percent change in real GDP in the third quarter reflected a downturn in imports, an upturn in federal government spending and an acceleration of personal consumption expenditures that was partly offset by a downturn in private inventory investment and decelerations in exports, in state and local government spending, in residential fixed investment and in nonresidential fixed investment.

Consumption remained the strongest component of growth, contributing 2.2 percentage points to third quarter growth, a 70 basis point increase from the previous estimate. Fixed investment also increased from its second quarter reading, contributing 1.2 percentage points to GDP, 20 basis points higher than the previous estimate. The government contributed 0.8 percentage points to GDP, consistent with the previous two estimates. Inventories were a slight drag on GDP growth.

The economy has now experienced the two strongest back-to-back quarters of growth since 2003. This indicates that the U.S. economic recovery has transitioned into a self-sustainable expansion.

Read the BEA release.

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