WASHINGTON—The U.S. economy grew 2.1% in the third quarter, remaining unchanged from the second estimate, according to the Commerce Department's final estimate.
NAFCU Chief Economist and Vice President of Research Curt Long noted the new estimate indicates a slight pickup from the second quarter, with upward revisions to personal consumption expenditures and nonresidential investment offset by a downward revision to private inventories.
"The biggest downside risks remain the trade war and slowing global growth," said Long in a new NAFCU Macro Data Flash report. "Industrial activity is still weak, but the rest of the economy looks solid. The labor market is strong and tightening further, and consumers are spending at a steady pace.
"The road ahead will continue to be volatile, and the next downturn may only be a headline away, but for now the economic picture has cleared up since the anxiety-filled summer months," Long added. "Real GDP growth has been close to 2% for nearly the entire duration of the recovery, and NAFCU expects something similar in 2020."
Real GDP Drivers
Contributions of growth of real GDP came from gains in consumption (+2.1%), government spending (+0.3%), and residential investment (+0.2%). Net exports reduced growth 0.1%, as did nonresidential investments (-0.3%).
PCE inflation, the Fed's preferred inflation metric, decreased from 2.4% in the second quarter to 1.4% in the third quarter. However, core PCE inflation (excluding food and energy) increased from 1.9% to 2.1% over that time, a downward revision of 0.1%, Long said.
Also of note, corporate profits declined 0.6% in the third quarter, a sharp decline from the second quarter. Gross domestic income – an alternative measure often compared to GDP growth – rose 2.1%, up from 0.9% in the previous period, Long noted.