October 30, 2019 - By Ataman Ozyildirim, Senior Director, Economics, The Conference Board - US Real Gross Domestic Product grew by 1.9 percent during the third quarter of 2019, in line with The Conference Board forecast. Consumer spending was again the strongest driver of growth, following a very strong Q2 consumption growth of 4.6 percent. Consumer spending should continue to support growth, despite the weakness in business spending driven by high uncertainty in the global outlook.
The divergence between consumers’ outlook and business confidence is again reflected in this report. Nonresidential fixed investment contributed negatively to GDP growth for two consecutive quarters. In contrast, residential investment improved for the first time since the last quarter of 2017. The US economy is slowing down to its long-term growth potential and should grow at 2 percent for the second half of 2019.
Given the recent underperformance of investment and global uncertainties, the FOMC is expected to cut the Federal Funds rate today. Looking ahead, if the US economy remains around its long-term growth rate, future cuts later in the year will become less likely.
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Source: The Conference Board
Gross Domestic Product, Third Quarter 2019 (Advance Estimate)
October 30, 2019 - Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the third quarter of 2019 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.0 percent.
The GDP estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see “Source Data for the Advance Estimate” on page 2). The "second" estimate for the third quarter, based on more complete data, will be released on November 27, 2019.
The deceleration in real GDP in the third quarter reflected decelerations in PCE, federal government spending, and state and local government spending, and a larger decrease in nonresidential fixed investment. These movements were partly offset by a smaller decrease in private inventory investment, and upturns in exports and in residential fixed investment.The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), federal government spending, residential fixed investment, state and local government spending, and exports 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 (table 2).
Current dollar GDP increased 3.5 percent, or $185.6 billion, in the third quarter to a level of $21.53 trillion. In the second quarter, GDP increased 4.7 percent, or $241.4 billion (tables 1 and 3).
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 (table 4). 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 2.2 percent, compared with an increase of 1.9 percent.
Personal Income
Current-dollar personal income increased $172.8 billion in the third quarter, compared with an increase of $244.2 billion in the second quarter. The deceleration reflected a downturn in personal income receipts on assets and decelerations in compensation and in personal current transfer receipts that were partly offset by an acceleration in proprietors’ income (table 8).
Disposable personal income increased $181.7 billion, or 4.5 percent, in the third quarter, compared with an increase of $192.6 billion, or 4.8 percent, in the second quarter. Real disposable personal income increased 2.9 percent, compared with an increase of 2.4 percent.
Personal saving was $1.34 trillion in the third quarter, compared with $1.32 trillion in the second quarter. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 8.1 percent in the third quarter, compared with 8.0 percent in the second quarter.
Source Data for the Advance Estimate
Information on the source data and key assumptions used for unavailable source data in the advance estimate is provided in a Technical Note that is posted with the news release on BEA’s Web site. A detailed "Key Source Data and Assumptions" file is also posted for each release. For information on updates to GDP, see the "Additional Information" section that follows.
Source: BEA
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