US Economy Grows 3.1 percent in Q3, Surpassing Prior Estimates
This 'third' estimate exceeds the second quarter's growth rate of 3 percent and shows an improvement from the 2.8 percent Q3 growth rate in the second estimate
The U.S. economy grew at an annual rate of 3.1 percent in the third quarter of 2024, outpacing earlier projections, according to the latest data from the U.S. Bureau of Economic Analysis (BEA). This "third" estimate exceeds the second quarter's growth rate of 3 percent and shows an improvement from the 2.8 percent growth rate previously reported in the second estimate for the same period. The latest Department of Labor (DoL) report also shows that unemployment insurance claims fell by 220,000. The Federal Reserve, which has been balancing the imperatives of economic growth and containing inflation, has indicated that it may not cut the interest rates at the same rate as estimated earlier because of economic and political uncertainties.
Detailed Revisions and Key Drivers of Growth
The revised growth rate comes on the back of stronger consumer spending and export activities, with notable adjustments made to the prior data that initially underestimated these areas. Private inventory investments, however, saw a downward revision, slightly tempering the overall increase. This third estimate is informed by more comprehensive source data compared to earlier reports.
Gross Domestic Product (Third Estimate)
Current dollar GDP also showed a robust increase, rising 5 percent to a total of $29.37 trillion, a figure $20.6 billion higher than earlier estimates for the quarter. Consumer spending and federal government expenditures were primary contributors to this quarter's growth, alongside a notable uptick in exports. Imports, which negatively impact GDP calculations, increased as well.
Inflation and Income Trends
The price index for gross domestic purchases remained stable at 1.9 percent, aligning with prior estimates. The personal consumption expenditures (PCE) price index, a key measure of inflation, also held steady at a 1.5% increase. However, when excluding food and energy, the core PCE price index edged higher by 0.1 percentage points to 2.2 percent.
Corporate Profits (Revised Estimate)
On the corporate front, profits dipped slightly in the third quarter, with current production profits declining by $15.0 billion. This revision reflects a $4.9 billion larger decrease than previously reported, with nonfinancial corporations and rest-of-the-world profits experiencing significant adjustments.
Industry Contributions to Economic Growth
This latest GDP report also includes an analysis of contributions by various industry sectors. Service industries showed strong performance, particularly in retail trade and healthcare, both bolstered by significant consumer engagement. The government sector also reported gains, led by increases at the state and local levels.
Gross Output by Industry
Overall industry gross output rose by 3.2%, driven by a marked increase in service-producing industries, which outpaced gains in goods-producing sectors. This broader measure captures both final uses and intermediate inputs, providing a comprehensive view of industrial activity during the quarter.
Today's release paints a picture of an economy that is gaining momentum as it heads into the final quarter of 2024, with consumer spending and robust service sector activity leading the way.
