Survey of Current Business
November 2019
Volume 99, Number 11

GDP and the Economy

Advance Estimates for the Third Quarter of 2019

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Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the third quarter of 2019, 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 2.0 percent.

The increase in real GDP in the third quarter reflected positive contributions from consumer spending, federal government spending, residential fixed investment, state and local government spending, and exports that were partly offset by negative contributions from nonresidential fixed investment and private inventory investment.2 Imports, which are a subtraction in the calculation of GDP, increased (chart 2 and table 1).

The deceleration in real GDP in the third quarter reflected decelerations in consumer spending, federal government spending, and state and local spending and a larger decrease in nonresidential fixed investment. These movements were partly offset by a smaller decrease in private inventory investment and upturns in exports and in residential fixed investment.

  • The deceleration in consumer spending reflected decelerations in spending on both goods and services. The deceleration in spending on goods was led by a deceleration in motor vehicles and a downturn in clothing and footwear. The deceleration in spending on services primarily reflected a downturn in recreation services and a slowdown in health care.
  • The slowdown in federal government spending primarily reflected a deceleration in nondefense spending. Second-quarter spending had been boosted as the federal government returned to normal operations after the partial government shutdown that occurred in the fourth quarter of 2018 and the first quarter of 2019. For more information, see “How will the federal government shutdown be reflected in GDP for the fourth quarter of 2018 and the first quarter of 2019?
  • The deceleration in state and local spending mainly reflected a downturn in gross investment in structures.
  • The larger decrease in nonresidential fixed investment reflected a downturn in spending on equipment, which was more than accounted for by a downturn in computers and peripheral equipment, and a larger decrease in spending on structures. These movements were partly offset by an acceleration in spending on intellectual property products.
  • The smaller decrease in private inventory investment primarily reflected upturns in retail trade and nondurable goods manufacturing industries.
  • The upturn in exports reflected an upturn in exports of goods, led by a smaller decrease in nonautomotive capital goods and an upturn in automotive vehicles, engines, and parts.

Prices for gross domestic purchases, goods and services purchased by U.S. residents, increased 1.4 percent in the third quarter after increasing 2.2 percent in the second quarter (chart 3 and table 2). The deceleration primarily reflected a deceleration in the prices for consumer goods; the main contributor was a downturn in prices for gasoline and other energy goods.

Food prices turned down, decreasing 0.6 percent in the third quarter after increasing 0.7 percent in the second quarter. Energy goods and services decreased 8.0 percent after increasing 18.8 percent in the second quarter. Gross domestic purchases prices excluding food and energy increased 1.8 percent in the third quarter, the same rate as in the second quarter.

Chart 3. Prices for Gross Domestic Purchases

[Click chart to expand]

Consumer prices excluding food and energy, a measure of the “core” rate of inflation, accelerated, increasing 2.2 percent in the third quarter after increasing 1.9 percent in the second quarter.

Personal income, which is measured in current dollars, increased $172.8 billion in the third quarter after increasing $244.2 billion in the second quarter (table 3). The deceleration primarily reflected a downturn in personal interest income and a deceleration in private wages and salaries that were partly offset by an upturn in farm proprietors’ income.

Personal current taxes decreased $8.9 billion in the third quarter after increasing $51.5 billion in the second quarter.

Disposable personal income (DPI) increased $181.7 billion in the third quarter after increasing $192.6 billion in the second quarter.

The personal saving rate—personal saving as a percentage of DPI—was 8.1 percent in the third quarter; in the second quarter, the personal saving rate was 8.0 percent (chart 4).

Real DPI increased 2.9 percent in the third quarter after increasing 2.4 percent in the second quarter (chart 5). Current-dollar DPI increased 4.5 percent after increasing 4.8 percent. 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.

 


  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.”