WASHINGTON—The U.S. economy grew a downwardly revised 3.4% in the third quarter, according to the Commerce Department's third and final estimate.
"The revision mainly resulted from markdowns to consumer spending and net exports," said NAFCU Research Assistant Yun Cohen.
"Overall, the economy remains on solid footing and will likely reach nearly 3% growth for the year of 2018," Cohen added in a NAFCU Macro Data Flashreport. "However, growth will likely moderate somewhat in 2019 amid growing headwinds. Business investment has slowed in recent months as impact from the tax stimulus fade and as trade concerns persist. Weakness in the housing sector, uncertainties surrounding Brexit and slowing growth abroad pose additional downside risks."
The Commerce Department's data revealed that a positive adjustment to inventory accumulation (+$86.6 billion previous estimate; +$89.8 billion revised estimate) was outweighed by downward revisions to consumer spending (+3.6% previous; +3.5% revised), net exports (-$945.8 billion previous; -$949.7 billion revised) and residential investment (-2.6% previous; -3.6% revised).
Contributions to Growth
Contributions to growth of real gross domestic product (GDP) came from gains in personal consumption expenditures (+2.37%), inventory accumulation (+2.33%), government spending (+0.44%) and nonresidential investment (+0.35%). Net exports reduced growth 1.99%, followed by residential investment (-0.14%), Cohen said.
Personal consumption expenditure (PCE) inflation, the Fed's preferred metric, decreased from 2% in the second quarter to an upwardly revised 1.6% in the third quarter. Meanwhile, core PCE inflation (excluding food and energy) decreased from 2.1% to an upwardly revised 1.6%.
Real gross domestic income increased an upwardly revised 4.3% in the third quarter compared to a 0.9% growth in the second quarter. Nominal corporate profits increased 2% from the second quarter and were 7.9% higher than the same time last year, Cohen noted.