Q3 GDP Jumps 2.9% On Rise In Inventory And Exports, Offset By Weak Consumption And Investment

For once it appears that the Atlanta Fed, with its 2.1% Q3 GDP nowcast was overly pessimistic - although perhaps the November 8 election may have had something to do with it - and moments ago the BEA reported that in the third quarter, US GDP increased at an annual rate of 2.9%  according to the first "advance" estimate released up more than double from the Q2 real GDP of 1.4%, and beating Wall Street consensus of a 2.6% rise in the quarter. The move higher was driven by a jump in inventory accumulation and exports, while consumption disappointed, as Real Consumer Spending rose 2.1% Q/Q, far below the 4.3% spike in Q2 and missing estimates of a 2.6% print.

The rebound was driven by a jump in inventories which contributed 0.6% to the bottom line, while net trade added another 0.8%, up from just 0.1% in Q2.

On the other hand, personal consumption which was a major outlier in Q2, contracted notably, and rose by just 1.47% in Q3, down nearly by half from 2.88% in Q2.

Finally, th bleak capex picture remains, as Fixed Investment in the US has now declined for a fourth consecutive quarter, subtracting 0.1% from Q3 GDP.

The details:

The increase in real GDP partly reflected an increase in consumer spending on services, notably on housing and utilities and on health care, i.e., the tax known as Obamacare boosted the economy again. Spending on durable goods, notably on motor vehicles and parts, also increased. Exports of goods increased, notably in foods, feeds, and beverages and in industrial supplies and materials. Exports of services also increased. In addition, private inventory investment increased, as did federal government spending and business investment.

Offsetting these contributions to growth, residential housing investment, consumer spending on nondurable goods, and state and local government spending declined.

Personal income and saving

Real disposable personal income (DPI), personal income adjusted for taxes and inflation, increased 2.2 percent in the third quarter after increasing 2.1 percent in the second quarter. Personal saving as a percentage of DPI was 5.7 percent in the third quarter, the same as in the second quarter.

Third?quarter prices

Prices of goods and services purchased by U.S. residents—gross domestic purchases prices— increased 1.5 percent in the third quarter after increasing 2.1 percent in the second quarter. Prices of energy goods increased, while food prices decreased.

Excluding food and energy, gross domestic purchases prices increased 1.8 percent in the third quarter after increasing 2.0 percent in the second quarter.

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Finally, on an annual basis, GDP rebounded fractionally from last quarter's 1.3%, rising just 1.5% compared to a year prior.

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