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Economy in Brief

U.S. GDP Growth Firms But Price Inflation Accelerates
by Tom Moeller  October 26, 2012

Economic growth recovered somewhat last quarter. Real GDP increased at a 2.0% (2.3% y/y) annual rate, up from the unrevised 1.3% Q2 gain. Consensus expectations were for a 1.8% rise. Improved growth in domestic final sales drove the gain with a 2.3% (2.0% y/y) advance. Growth in GDP and domestic sales were, however, only back to the Q1 rate.

Improved gains in domestic sales were broad-based. Personal consumption expenditure growth rose to 2.0% (2.0% y/y) as spending on motor vehicles increased at a 7.3% (8.9% y/y) rate and home furnishings & appliances outlays rose at an 8.2% (6.4% y/y) rate. Spending on clothing also posted a strong 6.2% (2.5% y/y) increase but services outlays rose just 0.8% (1.1% y/y). Government purchases rose at a 3.7% rate (-0.6% y/y). That increase was the first in over two years and was powered by a 13.1% (-1.6% y/y) rise in defense outlays. Residential investment also rose a strong 14.4% (13.8% y/y). To the downside, fixed business investment was a drag on growth and fell at a 1.3% rate (+4.7% y/y), the first quarterly decline in nearly three years.

The foreign trade sector had little effect on GDP growth. The 0.2 percentage point subtraction reflected a 1.6% (+2.3% y/y) decline in exports and a 0.2% (+2.6% y/y) slip in imports. Inventories subtracted a minimal 0.1 percentage point from growth. Farm inventories alone, however, reduced GDP growth by 0.4 percentage points due to the drought.

The GDP chain price index rose at an elevated 2.8% (1.7% y/y) rate, bolstered by a 6.6% (-1.3% y/y) decline in the import price index. The gain in the domestic final sales price index remained moderate at a 1.6% (1.4% y/y) rate.  

The latest GDP figures can be found in Haver's USECON and USNA databases; USNA contains basically all of the Bureau of Economic Analysis' detail on the national accounts, including the new integrated economics accounts and the recently added GDP data for U.S. Territories. The Consensus estimates can be found in AS1REPNA

 

Chained 2005 $,% AR Q3'12 (Advance) Q2'12 Q1'12 Q3'12
Y/Y
2011 2010 2009
Gross Domestic Product 2.0 1.3 2.0 2.3 1.8 2.4 -3.1
 Inventory Effect -0.1 -0.5 -0.4 0.4 -0.2 1.5 -0.8
Final Sales 2.1 1.7 2.4 1.9 2.0 0.9 -2.3
 Foreign Trade Effect -0.2 0.2 0.2 0.1 0.2 -0.4 1.0
Domestic Final Sales 2.3 1.4 2.2 2.0 1.8 1.3 -3.3
Demand Components
Personal Consumption 2.0 1.5 2.4 2.0 2.5 1.8 -1.9
Business Fixed Investment -1.3 3.6 7.5 4.7 8.6 0.7 -18.1
Residential Investment 14.4 8.4 20.6 13.8 -1.4 -3.1 -22.4
Government Spending 3.7 -0.7 -3.0 -0.6 -3.1 0.6 3.7
Chain-Type Price Index
GDP 2.8 1.6 2.0 1.7 2.1 1.3 0.9
Final Sales of Domestic Product 2.9 1.5 2.0 1.7 2.1 1.3 0.9
Final Sales to Domestic Purchasers 1.6 0.7 2.5 1.4 2.5 1.6 -0.2
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