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U.S. GDP Up 3.5% in the 3rd Quarter

U.S. gross domestic product, or GDP, grew 3.5% in the third quarter, according to a newly released report from the Bureau of Economic Analysis, or BEA. The increase, the first rise in a year, reflected higher consumer spending on durable goods—including automobiles—as well as investments in home building. By comparison, GDP decreased 0.7% in the second quarter.

Some highlights of the GDP report:

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures, exports, private inventory investment, federal government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

In particular, motor vehicle output added 1.66 percentage points to the third-quarter change in real GDP after adding 0.19 percentage points to the second-quarter change. Final sales of computers subtracted 0.11 percentage point from the third-quarter change in real GDP after subtracting 0.04 percentage point from the second-quarter change.

“The expansion in GDP in the third quarter is further confirmation that the recession ended in the second quarter,” said John Ryding and Conrad DeQuadros, RDQ Economics, New York. “However, we need many quarters of GDP running at this pace, or faster, to make significant inroads into reducing unemployment. In the fourth quarter, we are likely to see a further contribution to growth from a slower pace of inventory liquidation, and we expect manufacturing activity to be boosted by improving global trading conditions. The strong rise in both imports and exports in the third quarter was an encouraging sign that world trade is recovering.”

The uptick in GDP was also reflected in the personal savings rate. According to the BEA, personal outlays increased $148.2 billion, or 5.8% percent, in the third quarter, compared with an increase of $8.2 billion, or 0.3%, in the second. Personal saving—disposable personal income less personal outlays—was $364.6 billion in the third quarter, compared with $533.1 billion in the second. The personal saving rate was 3.3% in the third quarter, compared with 4.9% in the second.

The full GDP report is available from the Bureau of Economic Analysis.
 

Source: Bureau of Economic Analysis, The New York Times

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