GDP and the Economy

Advance Estimates for the Third Quarter of 2018

By Lisa S. Mataloni  |  Volume 98, Number 11  |  November 19, 2018

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Real gross domestic product (GDP) increased at an annual rate of 3.5 percent in the third quarter of 2018, according to the advance estimates of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 In the second quarter, real GDP increased 4.2 percent.

The increase in real GDP in the third quarter reflected positive contributions from consumer spending, inventory investment, state and local government spending, federal government spending, and nonresidential fixed investment. These contributions were partly offset by negative contributions from exports and residential fixed investment.2 Imports, which are a subtraction in the calculation of GDP, increased (chart 2).

Chart 1. Real GDP: Percent Change From Preceding Quarter

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Chart 2. Real GDP: Contributions to the Percent Change in 2018:III

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The deceleration in real GDP growth in the third quarter primarily reflected a downturn in exports (line 16) and a deceleration in nonresidential fixed investment (line 9). These movements were partly offset by an upturn in nonfarm inventory investment (line 14). Imports increased in the third quarter after decreasing in the second quarter (line 19).

  • The downturn in exports primarily reflected downturns in foods, feeds, and beverages (mainly soybeans), in petroleum and products, and in nonautomotive capital goods.
  • The deceleration in nonresidential fixed investment primarily reflected a downturn in investment in structures (line 10). Decelerations in equipment (line 11) and in intellectual property products (line 12) also contributed to this deceleration. The main contributor to the downturn in structures was investment in mining exploration, shafts, and wells, which turned down following strong second-quarter growth.
  • The upturn in inventory investment was widespread across most industries. The leading contributors were the wholesale trade and manufacturing industries.
  • The upturn in imports was mostly accounted for by upturns in imported consumer durable goods (nonfood, nonautomotive) and in automotive vehicles, engines, and parts.
Table 1. Real Gross Domestic Product (GDP) and Related Measures
[Seasonally adjusted at annual rates]
Line   Share of current-dollar GDP (percent) Change from preceding period (percent) Contribution to percent change in real GDP (percentage points)
2018 2017 2018 2017 2018
III IV I II III IV I II II
1 Gross domestic product1 100.0 2.3 2.2 4.2 3.5 2.3 2.2 4.2 3.5
2 Personal consumption expenditures 68.1 3.9 0.5 3.8 4.0 2.64 0.36 2.57 2.69
3 Goods 21.2 6.8 −0.6 5.5 5.8 1.42 −0.13 1.16 1.20
4 Durable goods 7.2 12.7 −2.0 8.6 6.9 0.87 −0.15 0.60 0.48
5 Nondurable goods 14.1 4.0 0.1 4.0 5.2 0.55 0.02 0.56 0.72
6 Services 46.9 2.6 1.0 3.0 3.2 1.22 0.49 1.42 1.49
7 Gross private domestic investment 17.8 0.8 9.6 −0.5 12.0 0.14 1.61 −0.07 2.03
8 Fixed investment 17.5 6.2 8.0 6.4 −0.3 1.04 1.34 1.10 −0.04
9 Nonresidential 13.6 4.8 11.5 8.7 0.8 0.63 1.47 1.15 0.12
10 Structures 3.1 1.3 13.9 14.5 −7.9 0.04 0.40 0.43 −0.26
11 Equipment 6.0 9.9 8.5 4.6 0.4 0.56 0.49 0.27 0.03
12 Intellectual property products 4.5 0.7 14.1 10.5 7.9 0.03 0.58 0.45 0.35
13 Residential 3.9 11.1 −3.4 −1.3 −4.0 0.41 −0.14 −0.05 −0.16
14 Change in private inventories 0.4 ...... ...... ...... ...... −0.91 0.27 −1.17 2.07
15 Net exports of goods and services −3.1 ...... ...... ...... ...... −0.89 −0.02 1.22 −1.78
16 Exports 12.3 6.6 3.6 9.3 −3.5 0.79 0.43 1.12 −0.45
17 Goods 8.1 10.9 3.2 13.5 −7.0 0.83 0.26 1.06 −0.59
18 Services 4.2 −1.0 4.2 1.5 3.5 −0.04 0.18 0.07 0.15
19 Imports 15.5 11.8 3.0 −0.6 9.1 −1.68 −0.45 0.10 −1.34
20 Goods 12.6 14.2 2.4 −0.4 10.3 −1.62 −0.30 0.06 −1.23
21 Services 2.9 2.0 5.5 −1.4 3.8 −0.06 −0.15 0.04 −0.11
22 Government consumption expenditures and gross investment 17.2 2.4 1.5 2.5 3.3 0.41 0.27 0.43 0.56
23 Federal 6.4 4.1 2.6 3.7 3.3 0.26 0.17 0.24 0.21
24 National defense 3.8 2.9 3.0 5.9 4.6 0.11 0.11 0.22 0.17
25 Nondefense 2.6 5.7 2.1 0.5 1.5 0.15 0.06 0.01 0.04
26 State and local 10.8 1.4 0.9 1.8 3.2 0.15 0.10 0.20 0.35
  Addenda:
27 Gross domestic income (GDI)2 ...... 1.5 3.9 1.6 ...... ...... ...... ...... ......
28 Average of GDP and GDI ...... 1.9 3.1 2.9 ...... ...... ...... ...... ......
29 Final sales of domestic product 99.6 3.2 1.9 5.4 1.4 3.20 1.94 5.33 1.43
30 Goods 29.4 1.1 4.1 6.5 6.5 0.34 1.20 1.91 1.89
31 Services 62.1 2.1 1.2 2.9 2.9 1.32 0.73 1.78 1.82
32 Structures 8.5 7.9 3.4 5.5 −2.4 0.64 0.28 0.47 −0.21
33 Motor vehicle output 2.8 23.2 9.5 −5.8 7.4 0.58 0.26 −0.17 0.20
34 GDP excluding motor vehicle output 97.2 1.8 2.0 4.5 3.4 1.72 1.96 4.33 3.30
  1. The GDP estimates under the contribution columns are also percent changes.
  2. GDI is deflated by the implicit price deflator for GDP.

Note. Percent changes are from NIPA tables 1.1.1 and 1.2.1, contributions are from NIPA tables 1.1.2 and 1.2.2, and shares are from NIPA table 1.1.10 or are calculated from NIPA table 1.2.5.

 

Prices for gross domestic purchases, goods and services purchased by U.S. residents, increased 1.7 percent in the third quarter after increasing 2.4 percent in the second quarter (table 2, line 1, and chart 3). Food prices decelerated (line 20), increasing 0.5 percent after increasing 1.1 percent. Energy goods and services accelerated, increasing 3.2 percent in the third quarter after increasing 0.4 percent in the second quarter. Gross domestic purchases prices excluding food and energy (line 22) increased 1.7 percent in the third quarter after increasing 2.5 percent in the second quarter.

Consumer prices excluding food and energy (line 25), a measure of the “core” rate of inflation, decelerated, increasing 1.6 percent in the third quarter after increasing 2.1 percent in the second quarter.

Chart 3. Prices of Gross Domestic Purchases

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Table 2. Prices for Gross Domestic Purchases
[Percent change at annual rates; based on seasonally adjusted index numbers (2012=100)]
Line   Change from preceding period (percent) Contribution to percent change in gross domestic purchases prices (percentage points)
2017 2018 2017 2018
IV I II III IV I II III
1 Gross domestic purchases1 2.6 2.5 2.4 1.7 2.6 2.5 2.4 1.7
2 Personal consumption expenditures 2.7 2.5 2.0 1.6 1.81 1.63 1.32 1.05
3 Goods 1.5 2.2 0.4 −0.4 0.30 0.46 0.08 −0.08
4 Durable goods −2.2 −1.1 −1.6 −1.0 −0.16 −0.07 −0.11 −0.07
5 Nondurable goods 3.4 3.9 1.4 −0.1 0.46 0.53 0.19 −0.01
6 Services 3.3 2.6 2.7 2.5 1.50 1.17 1.24 1.12
7 Gross private domestic investment 1.3 2.5 3.1 2.0 0.22 0.42 0.53 0.35
8 Fixed investment 1.2 2.5 3.2 2.0 0.21 0.42 0.53 0.34
9 Nonresidential 0.7 0.7 2.0 1.5 0.09 0.09 0.26 0.19
10 Structures 2.3 3.2 5.1 3.1 0.07 0.09 0.15 0.09
11 Equipment −0.5 −0.3 0.8 1.2 −0.03 −0.02 0.05 0.07
12 Intellectual property products 1.2 0.4 1.4 0.8 0.05 0.02 0.06 0.03
13 Residential 3.1 8.8 7.3 4.0 0.11 0.32 0.27 0.15
14 Change in private inventories ...... ...... ...... ...... 0.02 0.01 −0.01 0.00
15 Government consumption expenditures and gross investment 3.2 2.9 3.3 2.0 0.53 0.48 0.55 0.33
16 Federal 1.3 1.8 2.0 1.5 0.08 0.11 0.13 0.09
17 National defense 1.2 1.4 1.3 1.1 0.05 0.05 0.05 0.04
18 Nondefense 1.4 2.4 3.0 2.0 0.04 0.06 0.08 0.05
19 State and local 4.4 3.6 4.1 2.3 0.45 0.37 0.42 0.24
  Addenda:
  Gross domestic purchases:                
20 Food 0.1 0.4 1.1 0.5 0.01 0.02 0.05 0.02
21 Energy goods and services 24.9 12.6 0.4 3.2 0.61 0.33 0.01 0.09
22 Excluding food and energy 2.1 2.4 2.5 1.7 1.95 2.19 2.33 1.61
  Personal consumption expenditures:                
23 Food and beverages purchased for off-premises consumption 0.2 0.2 1.2 0.4 ...... ...... ...... ......
24 Energy goods and services 24.1 12.7 0.7 3.3 ...... ...... ...... ......
25 Excluding food and energy 2.1 2.2 2.1 1.6 ...... ...... ...... ......
26 Gross domestic product 2.5 2.0 3.0 1.7 ...... ...... ...... ......
27 Exports of goods and services 6.1 4.0 5.8 0.1 ...... ...... ...... ......
28 Imports of goods and services 5.7 7.3 0.8 0.7 ...... ...... ...... ......
  1. The estimates under the contribution columns are also percent changes.

Note. Most percent changes are from NIPA table 1.6.7; percent changes for PCE for food and energy goods and services and for PCE excluding food and energy are from NIPA table 2.3.7. Contributions are from NIPA table 1.6.8. GDP, export, and import prices are from NIPA table 1.1.7.


Personal income (table 3, line 1), which is measured in current dollars, increased $180.4 billion in the third quarter, after increasing $180.7 billion in the second quarter. Accelerations in rental income, wages and salaries, and nonfarm proprietors’ income were offset by a downturn in farm proprietors’ income and a slowdown in dividend income.

Personal current taxes (line 29) increased $25.4 billion in the third quarter after increasing $11.7 billion in the second quarter.

Disposable personal income (DPI) (line 30 and chart 4) increased $155.0 billion in the third quarter, after increasing $168.9 billion in the second quarter.

The personal saving rate (line 33 and chart 5)—personal saving as a percentage of DPI—was 6.4 percent in the third quarter; in the second quarter the personal saving rate was 6.8 percent.

Real DPI (line 35) increased 2.5 percent in the third quarter, the same increase as in the second quarter. Current-dollar DPI (line 34) increased 4.1 percent after increasing 4.5 percent in the same period. The differences in the movements in real DPI and current-dollar DPI reflected a deceleration in the implicit price deflator for consumer spending, which is used to deflate DPI.

Chart 4. Real Disposable Personal Income

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Chart 5. Personal Saving Rate

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Table 3. Personal Income and Its Disposition
[Billions of dollars; quarterly estimates are seasonally adjusted at annual rates]
Line   Level Change from preceding period
2018 2017 2018
II III IV I II III
1 Personal income 17,499.8 17,680.2 208.0 216.1 180.7 180.4
2 Compensation of employees 10,820.7 10,934.8 97.4 141.5 110.6 114.2
3 Wages and salaries 8,806.2 8,905.0 81.5 122.5 95.5 98.8
4 Private industries 7,434.9 7,523.1 74.1 117.1 87.4 88.2
5 Goods-producing industries 1,476.2 1,490.2 9.6 41.9 23.9 14.0
6 Manufacturing 888.2 893.4 4.7 22.1 10.2 5.2
7 Services-producing industries 5,958.8 6,032.9 64.5 75.1 63.5 74.1
8 Trade, transportation, and utilities 1,358.9 1,374.3 4.8 18.8 14.2 15.4
9 Other services-producing industries 4,599.8 4,658.6 59.7 56.3 49.3 58.7
10 Government 1,371.2 1,381.9 7.4 5.5 8.1 10.7
11 Supplements to wages and salaries 2,014.5 2,029.8 15.9 19.0 15.1 15.3
12 Proprietors' income with IVA and CCAdj 1,568.5 1,580.5 18.6 23.8 18.6 12.0
13 Farm 37.0 29.0 −0.9 −0.2 1.8 −8.0
14 Nonfarm 1,531.5 1,551.5 19.5 24.0 16.8 20.0
15 Rental income of persons with CCAdj 754.2 767.5 13.3 4.0 5.0 13.2
16 Personal income receipts on assets 2,747.8 2,770.3 77.7 26.6 28.3 22.5
17 Personal interest income 1,606.5 1,615.2 77.1 20.4 8.9 8.6
18 Personal dividend income 1,141.2 1,155.1 0.6 6.2 19.3 13.9
19 Personal current transfer receipts 2,965.8 2,998.1 12.3 46.4 31.9 32.3
20 Government social benefits to persons 2,905.4 2,936.5 11.0 44.3 29.7 31.1
21 Social security 969.1 977.2 5.7 25.3 8.2 8.1
22 Medicare 724.5 739.9 7.1 7.1 10.8 15.4
23 Medicaid 602.6 609.7 −0.4 7.1 12.3 7.1
24 Unemployment insurance 25.5 24.7 −0.8 −0.5 −2.0 −0.8
25 Veterans' benefits 107.9 110.3 2.2 3.6 2.4 2.4
26 Other 475.8 474.7 −2.8 1.7 −2.0 −1.1
27 Other current transfer receipts, from business (net) 60.4 61.6 1.3 2.1 2.2 1.2
28 Less: Contributions for government social insurance 1,357.1 1,370.9 11.3 26.2 13.6 13.8
29 Less: Personal current taxes 2,041.7 2,067.1 22.4 −40.9 11.7 25.4
30 Equals: Disposable personal income (DPI) 15,458.1 15,613.1 185.6 257.0 168.9 155.0
31 Less: Personal outlays 14,403.8 14,613.4 230.0 111.5 208.9 209.7
32 Equals: Personal saving 1,054.3 999.6 −44.5 145.5 −40.0 −54.7
33 Personal saving as a percentage of DPI 6.8 6.4 ...... ...... ...... ......
  Addenda:
  Percent change at annual rate            
34 Current-dollar DPI ...... ...... 5.1 7.0 4.5 4.1
35 Real DPI, chained (2012) dollars ...... ...... 2.3 4.4 2.5 2.5
CCAdj
Capital consumption adjustment
IVA
Inventory valuation adjustment

Note. Dollar levels and percent changes are from NIPA tables 2.1 and 2.2B.

 

 

  1. “Real” estimates are in chained (2012) dollars, and price indexes are chain-type measures. Each GDP estimate for a quarter (advance, second, and third) incorporates increasingly comprehensive and improved source data; for more information, see “The Revisions to GDP, GDI, and Their Major Components” in the January 2018 Survey of Current Business. Quarterly estimates are expressed at seasonally adjusted annual rates, which reflect a rate of activity for a quarter as if it were maintained for a year.
  2. In this article, “consumer spending” refers to “personal consumption expenditures,” “inventory investment” refers to “change in private inventories,” and “government spending” refers to “government consumption expenditures and gross investment.”