The US Bureau of Economic Analysis says real gross domestic product increased at an annual rate of 2.9 percent in the third quarter of 2016, according to the “advance” estimate. In the second quarter, real GDP increased 1.4 percent.
However a key inflation indicator in the GDP report, the personal consumption expenditures price index, slowed from the second quarter to a 1.4 percent annual rate. The Fed has focused its easy money policy on boosting inflation to 2.0 percent, based on the broader PCE price index.
The Bureau emphasized that the third-quarter advance estimate released is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the third quarter, based on more complete data, will be released on November 29, 2016.
Real GDP: Percent Change from Preceding Quarter
The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and nonresidential fixed investment that were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP growth in the third quarter reflected an upturn in private inventory investment, an acceleration in exports, a smaller decrease in state and local government spending, and an upturn in federal government spending. These were partly offset by a smaller increase in PCE, and a larger increase in imports.
Current-dollar GDP increased 4.4 percent, or $201.1 billion, in the third quarter to a level of $18,651.2 billion. In the second quarter, current dollar GDP increased 3.7 percent, or $168.5 billion.
The price index for gross domestic purchases increased 1.6 percent in the third quarter, compared with an increase of 2.1 percent in the second quarter (table 4). The PCE price index increased 1.4 percent, compared with an increase of 2.0 percent. Excluding food and energy prices, the PCE price index increased 1.7 percent, compared with an increase of 1.8 percent.
Personal Income
Current-dollar personal income increased $153.6 billion in the third quarter, compared with an increase of $153.1 billion in the second.
Disposable personal income increased $125.3 billion, or 3.6 percent, in the third quarter, compared with an increase of $140.6 billion, or 4.1 percent, in the second. Real disposable personal income increased 2.2 percent, compared with an increase of 2.1 percent.
Personal saving was $800.6 billion in the third quarter, compared with $793.5 billion in the second. The personal saving rate — personal saving as a percentage of disposable personal income — was 5.7 percent in the third quarter, the same as in the second.
