revised 3rd qtr GDP

 

U.S. GDP growth accelerated to 2.7% in the third quarter, supported by a rise in government spending.

GDP for 3Q was revised from 2.0% to 2.7%, a much more palatable rate of growth. However, the details of the report were not as exciting. The revision included:

            - a drop in personal consumption from 2.0% to 1.4%,

            - a drop in the savings rate from 3.7% to 3.6%,

            - and weaker personal income.

Inventories were the real story behind the upward revision, initially subtracting 0.1% from GDP and now adding 0.8%. This is not necessarily a good thing for 4Q because that build-up will have to be given back.

Federal government spending was up 9.5% and total government spending (including state and local) was up 3.5%, also boosting the headline growth rate. That jump in government spending is also unlikely to be replicated.