US Markets
Wednesday, November 29th, 2023 3:11 pm EDT
Key Points
- Stronger-than-Expected Economic Growth: The Commerce Department’s second estimate revealed that the U.S. economy experienced robust growth in the third quarter. The gross domestic product (GDP), a comprehensive measure of all goods and services produced during the three-month period, accelerated at an annualized pace of 5.2%. This surpassed the initial reading of 4.9% and exceeded the 5% forecast by economists polled by Dow Jones. The stronger-than-expected growth is attributed to better-than-anticipated business investment and increased government spending during the specified period.
- Key Contributors to Growth: The upward revision in economic growth primarily stemmed from notable increases in nonresidential fixed investment, encompassing structures, equipment, and intellectual property. Despite a rise of 1.3% in this category, there was a significant downward shift from previous quarters, indicating a nuanced aspect of the overall economic picture. Government spending also played a crucial role in boosting the third-quarter estimate, experiencing a substantial increase of 5.5% for the July-through-September period.
- Mixed Dynamics in Consumer Spending and Inflation: While the overall economic picture is positive, there are mixed dynamics in consumer spending and inflation. Consumer spending saw a downward revision, rising just 3.6% compared to the initial estimate of 4%, suggesting a potential moderation in the pace of economic activity driven by personal consumption. On the inflation front, there is a nuanced outlook. The personal consumption expenditures price index, closely monitored by the Federal Reserve, increased by 2.8%, with a marginal downward revision of 0.1 percentage points. However, the chain-weighted price index saw an upward move of 0.1 percentage points, reaching a 3.6% increase. These mixed signals highlight the complexity of inflationary pressures within the economy.
The U.S. economy exhibited stronger-than-expected growth in the third quarter, according to the Commerce Department’s second estimate, revealing an annualized pace of 5.2%. This surpassed the initial reading of 4.9% and exceeded the 5% forecast by economists polled by Dow Jones. The notable upward revision primarily stemmed from better-than-anticipated business investment and increased government spending during the July-through-September period.
A key contributor to the positive revision was the category of nonresidential fixed investment, encompassing structures, equipment, and intellectual property. Despite showing a rise of 1.3%, indicating growth, it marked a significant shift downward from previous quarters, introducing an element of nuance to the overall positive economic picture.
Government spending played a crucial role in boosting the Q3 estimate, experiencing a notable increase of 5.5% during the specified period. This injection of government expenditure contributed to the overall acceleration in economic growth.
However, there was a contrasting development in consumer spending, which saw a downward revision. The revised figure indicated a rise of 3.6%, compared to the initial estimate of 4%. This adjustment in consumer spending introduces a note of caution, suggesting a potential moderation in the pace of economic activity driven by personal consumption.
On the inflation front, there was a mixed outlook. The personal consumption expenditures price index, closely monitored by the Federal Reserve, recorded an increase of 2.8% for the period, reflecting a marginal downward revision of 0.1 percentage points. In contrast, the chain-weighted price index experienced an upward move of 0.1 percentage points, reaching a 3.6% increase. These dynamics highlight the complex and nuanced nature of inflationary pressures within the economy.
Corporate profits emerged as a positive aspect, experiencing a notable acceleration of 4.3% during the third quarter. This marked a sharp contrast to the 0.8% gain observed in the second quarter, underlining an improvement in the profitability landscape for businesses.
In summary, the U.S. economy demonstrated robust growth in the third quarter, driven by stronger business investment and government spending. However, nuances emerged with a downward revision in consumer spending, signaling potential challenges on the personal consumption front. The mixed inflation outlook further adds complexity to the economic landscape. On a positive note, corporate profits exhibited a significant acceleration, reflecting improved financial performance for businesses during the specified period.
For the full original article on CNBC, please click here: https://www.cnbc.com/2023/11/29/us-gdp-grew-at-a-5point2percent-rate-in-the-third-quarter-even-stronger-than-first-indicated.html
