Preliminary 3Q GDP Shows 0.5% Contraction

The third-quarter gross domestic product revision was as expected at negative 0.5% real growth, and the fourth quarter is shaping up for another drop. Growth has been slow for a year and is probably decreasing.

Consumption was lowered based on revised retail data, less energy spending, and lower services. Exports added less and inventories more as new data came in, lowering real final sales to a dismal negative 1.4%. Real final sales last declined more in the recessionary first quarter of 1991.

The GDP result would have been worse if not for a surge in military spending that pushed federal spending up 13.6%, more than double its normal pace.

Meanwhile, downward revisions to banking services costs lowered price indexes. GDP prices are now up 4.2% and core personal consumption expenditure prices rose 2.6% in the third quarter.

New wage data caused updates to wage and salary estimates. These were revised $37.3 billion lower for the second quarter, suggesting consumers have less to spend.

— Market News International

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