Third-quarter GDP lands with thud: just 1.5% growth

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Last edited Thu Oct 29, 2015, 11:05 AM - Edit history (1)

Source: MarketWatch

By Jeffry Bartash
[e-mail]
Published: Oct 29, 2015 8:57 a.m. ET

Businesses cut back on investment, but consumers spend big

U.S. GDP slowed to 1.5%, but don’t blame consumers. They were willing to spend even as businesses grew more skittish.

WASHINGTON (MarketWatch) — The U.S. economy cooled off in the third quarter as companies cut back production to prevent a buildup in inventories, particularly of goods destined for foreign markets.

Gross domestic product — the value of everything a nation produces — rose at a 1.5% annual pace from July through September, the government said Thursday. The U.S. had grown at a crisp 3.9% rate in the second quarter.

The slowdown stemmed mostly from the smallest increase in inventories in a year and a half. Companies also slashed spending on structures such as oil platforms and commercial buildings.

Yet even as businesses showed more caution, consumers continued to spend money at steady clip, a sign they are not as worried. Consumer spending, the single largest determinant of U.S economic growth, rose at a 3.2% annual pace following an even larger gain in the second quarter.

Read more: http://www.marketwatch.com/story/third-quarter-gdp-lands-with-thud-just-15-growth-2015-10-29

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BEA 15—50

* See the navigation bar at the right side of the news release text for links to data tables,
contact personnel and their telephone numbers, and supplementary materials.

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National Income and Product Accounts Gross Domestic Product: Third Quarter 2015 (Advance Estimate)

Real gross domestic product -- the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 1.5 percent in the third quarter of 2015, according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.9 percent.

The Bureau emphasized that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 2 and "Comparisons of Revisions to GDP" on page 4). The "second" estimate for the third quarter, based on more complete data, will be released on November 24, 2015.

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

Real GDP increased 1.5 percent in the third quarter, after increasing 3.9 percent in the second. The deceleration in real GDP in the third quarter primarily reflected a downturn in private inventory investment and decelerations in exports, in nonresidential fixed investment, in PCE, in state and local government spending, and in residential fixed investment that were partly offset by a deceleration in imports.

5 Things

What to Watch in the Third-Quarter U.S. GDP Report

The Commerce Department publishes its first look at the economy’s performance in the third quarter at 8:30 a.m. EDT Thursday. Economists expect gross domestic product expanded at a 1.5% seasonally adjusted annual rate July through September. That would be a slowdown from the 3.9% advance recorded in the second quarter. Here’s what to look for in the report.

28 Oct 2015 10:12am
By Eric Morath
@EricMorath
[e-mail]

Observe the title given to the report by the BEA: this is the advance estimate. It is subject to revision. For the second quarter:

July: U.S. economy expands at 2.3% in second quarter, picking up speed

September: U.S. growth raised to 3.9% in second quarter, GDP report shows

FRED: Real Gross Domestic Product