WASHINGTON – Real gross domestic product increased 2.5% in the third quarter, revised higher from 2.0% growth seen in the advance estimate last month and exceeding economists’ estimates as the core personal consumption expenditures number was unrevised, the Commerce Department reported Tuesday.
Consumer spending, which accounts for about 70% of GDP, was revised higher to a 2.8% increase for the third quarter from a 2.6% increase announced last month in the Commerce Department’s advance GDP estimate. Gasoline and used car purchases boosted consumer spending.
Core personal consumption expenditures, the Federal Reserve’s preferred measure of inflation, increased 0.8% for the quarter, unrevised from the initial estimate and the smallest quarterly increase since 2008.
Economists expected GDP would increase 2.4% for the quarter and core PCE would increase 0.8%, according to the median estimate from Thomson Reuters.
Exports were revised higher to a 6.3% increase from the 5.0% reported in the advance report. As a result, the trade deficit for the quarter was revised lower to $552.2 billion from $561.5 billion. Imports were revised lower to an increase of 16.8% from a 17.4% gain.
State and local government spending increased for the quarter, revised up to a 0.8% increase from a 0.2% decrease. It was the highest quarterly growth for state and local spending since the second quarter of 2009.
Corporate profits increased by $44 billion, or 2.8%, in the third quarter after a 3.0% increase in the second quarter.
