According to the BEA, the 3rd-quarter increase reflects positive contributions from personal consumption expenditures (PCE), private inventory investment, nonresidential fixed investment, exports, and federal government spending. Negative contributions came from residential fixed investment, and state and local government spending. Imports, which subtract from GDP decreased.

Personal Income Decelerates

Current-dollar personal income increased $113.7 billion in the third quarter, compared with an increase of $119.1 billion in the second. The deceleration in personal income primarily reflected decelerations in personal dividend income, in rental income, and in wages and salaries that were offset by an acceleration in government social benefits, a smaller decrease in personal interest income, an acceleration in nonfarm proprietors’ income, and a smaller decrease in farm proprietors’ income.

Disposable personal income increased $73.6 billion, or 2.1 percent, in the third quarter, compared with an increase of $125.1 billion, or 3.6 percent, in the second. Real disposable personal income increased 0.6 percent, compared with an increase of 3.3 percent.

Savings Rate Decreases

Personal saving was $494.8 billion in the third quarter, compared with $545.6 billion in the second. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 3.4 percent in the third quarter, compared with 3.8 percent in the second.

RECOMMENDED ARTICLES

Contribution Breakdown

  • PCE Goods: 0.92
  • PCE Services 0.70
  • Fixed Investment: 0.25
  • Change in Private Inventories 0.73
  • Net Exports: 0.28
  • Net Imports: 0.12
  • Federal Consumption: -0.02
  • State and Local Consumption: -0.09

Bottom Line

Once again, the GDPNow final estimate of 2.5% was far closer to the mark than the FRBNY Nowcast estimate of 1.46 last Friday. The final Nowcast, will be available later this morning.

There are two more revisions coming up. Right now, I expect those revisions will be negative.

This report was good as one might have expected. However, the good news comes at the expense of savings. A declining rate of savings was to be expected due to hurricanes. Inventories also boosted GDP.

Mike "Mish" Shedlock

3rd-Quarter Real GDP Rises 1.9%, Near Top of Consensus Range

The BEA reported real GDP rose 1.9% for the quarter in a consensus range of 1.2% to 2.0%.

2nd Quarter GDP Revised Up to 3.0%, Annualized Inflation 1.0%

In its second of three estimates, the BEA revised second-quarter GDP up to 3.0% from 1.2%. The consensus was 2.8%.

GDPnow, Nowcast Boost Fourth-Quarter GDP Estimates

GDPNow upped its 4th-quarter GDP estimate to 3.3% from 2.9% a week ago. Nowcast upped its forecast to 4.0% from 3.9%.

Third-Quarter GDP Revised Slightly Lower in 3rd Estimate: What's Next?

In its third and final estimate of the third-quarter GDP, the economy grew at 3.2%. The revision is statistical noise.

First-Quarter Real GDP 0.7%; Spending Slowest Since 2009: Nowcast Model Needs Serious Work

First quarter real GDP came in at 0.7% vs an Econoday consensus estimate of 1.1%. Consumer spending was the weakest since the 4th quarter of 2009.

Personal Income, Spending, PCE Inflation “Unexpectedly Weak”: Real Income and Spending Decline

The BEA reports “Real DPI decreased 0.1 percent in August and Real PCE decreased 0.1 percent. The PCE price index increased 0.2 percent. Excluding food and energy, the PCE price index increased 0.1 percent.”

Explaining the First-Quarter GDP 3.2% Surprise

Real GDP rose 3.2% in the first quarter aided by a questionable measure of inflation.

Personal Income Up But Real Consumer Spending Declines Second Month

The BEA’s Personal Income and Outlays report shows personal income rose 0.4% but consumer spending rose a scant 0.1% in February.

3rd Quarter GDP Estimates Collapse

In the wake of today’s economic reports, third-quarter GDP estimates from the Atlanta Fed GDPNow model and the New York Fed Nowcast model each plunged 0.8 percentage points.