U.S. GDP Growth & Pricing Pressures Ease in Q3
by:Tom Moeller
|in:Economy in Brief
Summary
- GDP grew 2.8% (SAAR) after 3.0% Q2 gain, while final demand components are firm.
- Inventory & foreign trade effects are negative.
- Price index growth moderates to slowest this year; consumer price gain weak.
Real GDP growth of 2.8% (SAAR) last quarter followed a 3.0% gain in the second quarter and 1.6% growth in the first quarter. It compared to expectations for 3.0% growth in the Action Economics Forecast Survey. Annual growth eased to 2.7% from 3.2% at the end of last year and 4.0% at the beginning of 2022.
Holding back GDP growth was a 0.17 percentage point subtraction by business inventories. Net exports went on to subtract 0.56 percentage point. Exports rose 8.9% (4.5% y/y) but imports surged 11.2% (7.2% y/y).
Domestic final demand increased 3.5% (3.1% y/y), the strongest growth this year, after rising 2.8% in Q2. It was powered by a 5.0% surge (3.4% y/y) in government spending which reflected a 14.8% jump (4.1% y/y) in defense spending. State & local spending rose a steady 2.3% (3.4% y/y).
Private sector final sales grew 3.2% (3.1% y/y) after a 2.7% rise in Q2. Consumer spending grew 3.7% (3.0% y/y) as spending on durable goods grew broadly at an 8.1% rate (3.6% y/y). Nondurable goods buying strengthened 4.9% (2.3% y/y) reflecting strength in clothing purchases. Purchases of services rose a steady 2.6% (3.1% y/y) as transportation spending jumped 4.4% (6.0% y/y).
Business fixed investment grew 3.3% (3.9% y/y). Structures spending fell 4.1% (+2.1% y/y) but spending on equipment surged 11.1% (5.4% y/y). Computer purchases grew 14.7% (9.0% y/y). Intellectual property product spending rose just 0.6% (3.5% y/y). Residential investment declined 5.2% (+1.8% y/y) following a 2.8% slump.
Price inflation moderated last quarter. The GDP price index rose 1.8% (2.2% y/y) after a 2.5% Q2 rise. The PCE price index rose 1.5% (2.3% y/y) as the price index less food & energy increased 2.2% (2.7% y/y), lower than a 5.2% rise (4Q/4Q) during 2022. The business fixed investment price index rose 2.4% (1.9% y/y) and the residential price index increased 2.7% (2.6% y/y). The government price index increased 2.5% (2.4% y/y).
The GDP data can be found in Haver’s USECON and USNA databases. USNA contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in AS1REPNA.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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