Daily Spotlight: Worth the Wait, 3Q GDP Up 4.3%

Summary

According to the initial estimate released today by the Bureau of Economic Analysis, U.S. Gross Domestic Product (GDP) rose in the third quarter at an annualized rate of 4.3%. That’s above the 3.2% consensus and an increase from the 3.8% increase in the third quarter. The report was delayed by the federal government shutdown and will replace what are normally the first two, of three, reports. Spending by consumers rose 3.5% in 3Q, which was an improvement from the 2.5% increase in 2Q. Within goods, nondurables were up a very strong 3.9%. Durables were up 1.6%, after a 2.3% increase in 2Q. There was a drag from vehicles and products for the home. The huge services category was up 3.7% after an increase of 2.6% in 2Q. This is a nice rebound that dispels some fears about the consumer. The healthcare component was strong. Services are added 1.74 points of growth. Private investment declined 0.3%, hurt by a 6.3% decline in nonresidential structures. Residential investment (housing) was down 5.1%. Equipment and intellectual property were each up a strong 5.4%, helped by spending on artificial intelligence. Imports decreased 4.7% as trade normalized after tariff-related volatility in the first half of the year. Net exports of goods and services, often called the trade balance, raised 3Q GDP by 1.59 points percentage points. Government consumption and investment rose 2.2%. The federal government was up 2.9%, with national defense up 5.8%. Nondefense was down 1.1%, State and local government was up 1.8%. The report also contains data on inflation, which picked up in 3Q. The

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