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Economic Growth Is Steady, But Underwhelming

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the third…

  • January 12, 2020

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the third quarter of 2019, according to the “third” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.0 percent. This is consistent with post-recession pace of growth, which has been steady but a bit sluggish.

The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was also 2.1 percent.

With the third estimate for the third quarter, upward revisions to personal consumption expenditures (PCE) and nonresidential fixed investment were offset by a downward revision to private inventory investment.

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

The acceleration in real GDP in the third quarter reflected a smaller decrease in private inventory investment and upturns in exports and residential fixed investment that were partly offset by decelerations in PCE, federal government spending, and state and local government spending, and a larger decrease in nonresidential fixed investment.

Real gross domestic income (GDI) increased 2.1 percent in the third quarter, compared with an increase of 0.9 percent in the second quarter.

The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.1 percent in the third quarter, compared with an increase of 1.4 percent in the second quarter.

Current‑dollar GDP increased 3.8 percent, or $202.3 billion, in the third quarter to a level of $21.54 trillion. In the second quarter, GDP increased 4.7 percent, or $241.4 billion.

The price index for gross domestic purchases increased 1.4 percent in the third quarter, compared with an increase of 2.2 percent in the second quarter.

The PCE price index increased 1.5 percent, compared with an increase of 2.4 percent. Excluding food and energy prices, the PCE price index increased 2.1 percent, compared with an increase of 1.9 percent.

Updates to GDP

The percent change in real GDP in the third quarter was unrevised. Upward revisions to PCE and nonresidential fixed investment were offset by a downward revision to private inventory investment.