U.S. GDP Growth Is Unrevised in Q3; After-Tax Corporate Profits Steady
by:Tom Moeller
|in:Economy in Brief
Summary
- GDP grew 2.8% (SAAR) after a 3.0% Q2 gain. Domestic final demand remains strong & unrevised.
- Before-tax profits dip.
- Inventory & foreign trade effects remain negative.
- Price index growth is slowest this year.
Real GDP growth of 2.8% (SAAR) last quarter was unrevised. It followed a 3.0% gain in the second quarter and 1.6% growth in Q1. The increase matched expectations in the Action Economics Forecast Survey. Growth during the latest four quarters eased to 2.7% from 3.2% at the end of last year.
After-tax profits were unchanged in Q3 (+0.6% y/y) following a 3.0% rise in Q2. Before-tax profits slipped 0.3% (+6.1% y/y). Financial sector earnings held steady (+26.6% y/y) while nonfinancial earnings strengthened 1.1% (3.9% y/y). Foreign sector profits declined 8.0% (-13.0% y/y).
Holding back GDP growth was a 0.11 percentage point subtraction by business inventories, revised from -0.17. Net exports subtracted 0.57 percentage point, revised from -0.56. Exports rose a lessened 7.5% (4.1% y/y) and imports surged a lessened 10.2% (7.0% y/y).
Domestic final demand increased an unrevised 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 (3.3% y/y) in government spending which followed a 3.0% gain. That reflected 8.9% growth (3.1% y/y) in federal government spending which included a 13.9% jump (3.9% y/y) in defense spending. State & local spending rose an improved 2.7% (3.5% y/y).
Private sector final sales grew an unrevised 3.2% (3.1% y/y) after a 2.7% rise in Q2. Consumer spending grew 3.5% (2.9% y/y), revised from 3.7%, as spending on durable goods grew broadly at a 7.6% rate (3.5% y/y), revised from 8.1%. Nondurable goods buying strengthened 4.5% (2.2% y/y), revised from 4.9%. Purchases of services rose a steady 2.6% (3.1% y/y).
Business fixed investment grew 3.8% (4.0% y/y), revised from 3.3% after rising 3.9% in Q2. Structures spending fell 4.7% (+1.9% y/y) but spending on equipment surged a little-revised 10.6% (5.3% y/y). Computer purchases soared 17.8% (9.7% y/y), revised from 14.7%. Intellectual property product spending rose an upwardly revised 2.5% (4.0% y/y). Residential investment declined 5.0% (+1.9% y/y), revised from 5.2% following a 2.8% slump.
The GDP price index rose 1.9% (2.2% y/y), revised from 1.8%, after a 2.5% Q2 rise. The PCE price index rose an unrevised 1.5% (2.3% y/y) as the price index less food & energy increased 2.1% (2.7% y/y), less than half of the 5.2% rise (4Q/4Q) during 2022. The business fixed investment price index rose 2.8% (2.0% y/y) and the residential price index increased 4.2% (2.9% y/y), revised from 2.7%. The government price index increased 2.4% both q/q and 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.
