Third Quarter GDP Exceeds Expectations at 2.9 Percent

Real GDP grew at a seasonally adjusted annual rate of 2.9% during the third quarter of 2016, according to the Bureau of Economic Analysis’s “advance” estimate, up from 1.4% in the second quarter. The increase reflected positive contributions from personal consumption expenditures, exports, private inventory investment, federal government spending, and nonresidential fixed investment, partially offset by negative contributions from residential fixed investment and state and local government spending.

Consumption was the largest contributor to GDP growth, accounting for 1.5% of the gain, down from 2.9% during the second quarter. Consumption spending increased to an annual rate of $11.6 trillion, up $60.9 billion from the preceding quarter. Net exports also contributed strongly to GDP, accounting for 0.8% of growth.

Residential fixed investment was one of the largest negative contributors, subtracting a total of 0.2% from GDP. Imports were also a drag on GDP, subtracting 0.3% from growth.

Government spending increased during the quarter, as an increase in federal government spending offset a decrease in state and local government spending. Government spending increased by by a seasonally adjusted and annualized $3.6 billion.

Read the BEA release.