US GDP grows at steady 2.8%, buoyed by consumer and business spending
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The news: The US economy expanded at a 2.8% annualised pace in the third quarter, supported by robust consumer spending and business investment, according to the second estimate from the Bureau of Economic Analysis (BEA).
The context: The second estimate included upward revisions to private inventories, nonresidential investment and local government spending from an October so-called advanced estimate, as well as downward revisions to exports, consumer spending, federal spending and imports.
The data reflects the continued resilience of the world’s largest economy despite inflation and relatively high interest rates.
It comes as Donald Trump’s election win raises the prospect of corporate tax cuts and import tariffs, two policies expected to have divergent effects on economic growth.
The numbers: Consumer spending grew 3.5% in the three months to September, its strongest performance this year, though slightly revised lower from 3.7% in the bureau’s advance estimate.
Non-residential investment rose 3.8%, while government spending increased 5%, led by a 14% jump in national defence outlays.
Gross domestic income (GDI) rose 2.2%, and its average with GDP, referred to as gross domestic output, was 2.5%.
After-tax corporate profits were largely unchanged, with non-financial firms seeing gains offset by declines in financial firms and foreign profits.
The GDP report showed the Fed’s preferred inflation metric – the personal consumption expenditures index – rose at an unchanged rate of 1.5% during the quarter, while core inflation, excluding food and energy, climbed 2.1%, 0.1 percentage points lower than in the advanced estimate.
Monthly PCE data is due to be released later today. Separate data from the Census Bureau showed durable goods orders grew 0.2% in October, the first gain since April.
The sources: Bureau of Economic Analysis , Census Bureau
