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October 28, 2005
Real GDP up 3.8% in the 3rd quarter
Click here for the full news release from the BEA.
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.8 percent in the third quarter of 2005, according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.3 percent.
...
The major contributors to the increase in real GDP in the third quarter were personal consumption expenditures (PCE), equipment and software, federal government spending, and residential fixed
investment. The contributions of these components were partly offset by a negative contribution from private inventory investment.
The acceleration in real GDP growth in the third quarter primarily reflected a smaller decrease in private inventory investment and accelerations in PCE and in federal government spending that were partly offset by decelerations in exports, in residential fixed investment, and in state and local government spending.
Final sales of computers contributed 0.11 percentage point to the third-quarter growth in real GDP after contributing 0.32 percentage point to the second-quarter growth. Motor vehicle output contributed 0.48 percentage point to the third-quarter growth in real GDP after subtracting 0.01 percentage point from the second-quarter growth.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 4.0 percent in the third quarter, compared with an increase of 3.3 percent in the second. Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in the third quarter, compared with an increase of 2.1 percent in the second.
...
Real personal consumption expenditures increased 3.9 percent in the third quarter, compared with an increase of 3.4 percent in the second. Durable goods purchases increased 10.8 percent, compared with an increase of 7.9 percent. Nondurable goods purchases increased 2.6 percent, compared with an increase of 3.6 percent. Services expenditures increased 3.2 percent, compared with an increase of 2.3 percent.
Real nonresidential fixed investment increased 6.2 percent in the third quarter, compared with an increase of 8.8 percent in the second. Nonresidential structures decreased 1.4 percent, in contrast to an increase of 2.7 percent. Equipment and software increased 8.9 percent, compared with an increase of 10.9 percent. Real residential fixed investment increased 4.8 percent, compared with an increase of 10.8 percent.
The NY Times has a story as well.
More later... off to class.
UPDATE: One of the stories related to 2nd quarter GDP was the strong growth in final sales. That number was buoyed by a drawing down of inventories. Well, real final sales of domestic product increased by 4.4% in the 3rd quarter, which isn't that bad either. The change in inventories subtracted about 0.55% from 3rd quarter growth. In other words, firms are still drawing down inventories as sales growth leads GDP growth. Consumer demand continues to be the economies strength (like we didn't know that already). Investment (nonresidential fixed) increased by less than in the 2nd quarter, and we know from many other sources that residential investment may be slowing. The net export sector was basically flat compared to the 2nd quarter, which is good when you consider how much net exports grew in the 2nd quarter. (We didn't give any of it back in the 3rd.)
All in all, not a bad report. This is the 10th quarter in a row where real GDP growth has exceeded 3%.
Inflation is starting to show up in the GDP deflator, however. The rate hikes are not over, not by a long shot.
UPDATE 2: David Tufte (voluntaryXchange) gives it a letter grade of "B". Mark Thoma (Economist's View) has more links. Kash (Angry Bear) also weighs in.
UPDATE 3: King Banaian (SCSU Scholars) mentions the slowing growth of personal income and expects that production will pick up in the next two quarters as rebuilding begins in earnest in the hurricane affected areas.
Posted by William Polley at October 28, 2005 9:47 AM
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» New GDP data and recession probabilities from Econbrowser
The Bureau of Economic Analysis yesterday released its advance estimates for the third quarter, reporting real GDP grew at an annual rate of 3.8%.
[Read More]Tracked on October 29, 2005 2:54 PM
Comments
Maybe the more interesting story is in the compensation data. It shows no acceleration, and maybe even a slowdown in the growth of both wage & salary and benefit costs.
Table B. 12-month percent changes in Employment Cost Index, not
seasonally adjusted through sep
Civilian workers
Compensation costs 4.3 4.1 3.7 3.9 3.8 3.1
Wages and salaries 4.0 3.6 3.2 2.9 2.4 2.3
Benefit costs 5.3 5.1 4.9 6.5 6.8 5.1
Private industry
Compensation costs 4.6 4.0 3.7 4.0 3.7 3.0
Wages and salaries 4.1 3.6 3.2 3.0 2.6 2.2
Benefit costs 6.0 4.9 4.8 6.5 6.8 4.8
The data does not copy cleanly - it is for 2000 to 2005
Posted by: spencer at October 28, 2005 11:02 AM
Spencer,
Yes, I had noticed that too when I was downloading some data for class a while back. Haven't blogged it yet. Worth thinking about.
Posted by: William Polley at October 28, 2005 11:50 AM