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The U.S. Economy Roars Along

The U.S. economy grew at an annual rate of 3.5 percent in the third quarter…

  • November 14, 2018

The U.S. economy grew at an annual rate of 3.5 percent in the third quarter of 2018, estimates the government’s Bureau of Economic Analysis. This follows a brisk 4.2 percent growth rate in the previous quarter.

The Q3 growth rate was brisker than expected, and makes for the best back-to-back quarterly growth reports in over four years.

BEA said the increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, state and local government spending, federal government spending, and nonresidential fixed investment that were partly offset by negative contributions from exports and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP growth in the third quarter reflected a downturn in exports and a deceleration in nonresidential fixed investment.

Imports increased in the third quarter after decreasing in the second. These movements were partly offset by an upturn in private inventory investment.

Current dollar GDP increased 4.9 percent, or $247.1 billion, in the third quarter to a level of $20.66 trillion. In the second quarter, current-dollar GDP increased 7.6 percent, or $370.9 billion (table 1 and table 3).

The price index for gross domestic purchases increased 1.7 percent in the third quarter, compared with an increase of 2.4 percent in the second quarter (table 4). The PCE price index increased 1.6 percent, compared with an increase of 2.0 percent. Excluding food and energy prices, the PCE price index increased 1.6 percent, compared with an increase of 2.1 percent.

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