Preliminary 3Q GDP Shows 2.8% Growth Rate

Third-quarter gross domestic product increased at a 2.8% annual rate, revised down from the advance 3.5% rate of growth, as consumer spending and business investment figures retreated from October estimates, the Commerce Department reported yesterday.

Consumer spending, which accounts for about 70% of GDP, rose 2.9% at an annual pace in the third quarter, revised lower from a 3.4% rate of increase in the advance estimate.

Core personal consumption expenditures — which exclude food and energy prices and is the Federal Reserve’s preferred measure of inflation — increased at a 1.3% annual rate compared to the 1.4% climb in the advance reading.

Despite the downward revisions, third-quarter GDP was still the largest since the third quarter of 2007.

Real GDP decreased 0.7% in the second quarter and had fallen for four consecutive quarters.

Economists expected GDP to be revised down to 2.9% growth and for the core PCE price index to be unchanged at 1.4% growth, according to the median estimate from Thomson Reuters.

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