GDP and the Economy

Advance Estimates for the Third Quarter of 2019

By Lisa S. Mataloni  |  Volume 99, Number 11  |  November 13, 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).

Chart 1. Real GDP: Percent Change From Preceding Quarter, bar chart

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Chart 2. Real GDP: Contributions to the Percent Change in 2019:III, bar chart

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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.
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)
2019 2018 2019 2018 2019
III IV I II III IV I II III
1 Gross domestic product1 100.0 1.1 3.1 2.0 1.9 1.1 3.1 2.0 1.9
2 Personal consumption expenditures 68.1 1.4 1.1 4.6 2.9 0.97 0.78 3.03 1.93
3 Goods 21.2 1.6 1.5 8.6 5.5 0.33 0.32 1.74 1.14
4 Durable goods 7.2 1.3 0.3 13.0 7.6 0.09 0.02 0.87 0.53
5 Nondurable goods 14.0 1.7 2.2 6.5 4.4 0.24 0.30 0.87 0.61
6 Services 47.0 1.4 1.0 2.8 1.7 0.65 0.46 1.29 0.79
7 Gross private domestic investment 17.4 3.0 6.2 −6.3 −1.5 0.53 1.09 −1.16 −0.27
8 Fixed investment 17.1 2.7 3.2 −1.4 −1.3 0.46 0.56 −0.25 −0.22
9 Nonresidential 13.3 4.8 4.4 −1.0 −3.0 0.64 0.60 −0.14 −0.40
10 Structures 2.8 −9.0 4.0 −11.1 −15.3 −0.29 0.12 −0.36 −0.48
11 Equipment 5.8 7.4 −0.1 0.8 −3.8 0.42 0.00 0.05 −0.23
12 Intellectual property products 4.8 11.7 10.8 3.6 6.6 0.51 0.48 0.17 0.30
13 Residential 3.7 −4.7 −1.0 −3.0 5.1 −0.18 −0.04 −0.11 0.18
14 Change in private inventories 0.3 ...... ...... ...... ...... 0.07 0.53 −0.91 −0.05
15 Net exports of goods and services −3.0 ...... ...... ...... ...... −0.35 0.73 −0.68 −0.08
16 Exports 11.6 1.5 4.1 −5.7 0.7 0.18 0.49 −0.69 0.09
17 Goods 7.6 2.6 4.6 −5.9 1.6 0.21 0.36 −0.48 0.12
18 Services 4.0 −0.7 3.3 −5.1 −0.8 −0.03 0.13 −0.21 −0.03
19 Imports 14.6 3.5 −1.5 0.0 1.2 −0.53 0.23 0.01 −0.17
20 Goods 11.8 2.3 −2.8 0.1 0.4 −0.28 0.36 −0.02 −0.05
21 Services 2.8 8.9 4.5 −0.7 4.4 −0.24 −0.13 0.02 −0.12
22 Government consumption expenditures and gross investment 17.5 −0.4 2.9 4.8 2.0 −0.07 0.50 0.82 0.35
23 Federal 6.7 1.1 2.2 8.3 3.4 0.07 0.14 0.53 0.22
24 National defense 3.9 5.2 7.7 3.3 2.2 0.20 0.29 0.13 0.08
25 Nondefense 2.7 −4.5 −5.4 16.1 5.2 −0.12 −0.15 0.40 0.14
26 State and local 10.9 −1.2 3.3 2.7 1.1 −0.14 0.36 0.29 0.12
Addenda:
27 Gross domestic income (GDI)2 ...... 0.8 3.2 1.8 ...... ...... ...... ...... ......
28 Average of GDP and GDI ...... 0.9 3.2 1.9 ...... ...... ...... ...... ......
29 Final sales of domestic product 99.7 1.0 2.6 3.0 2.0 1.02 2.57 2.92 1.97
30 Goods 29.6 4.8 7.3 2.1 4.6 1.39 2.12 0.62 1.35
31 Services 62.2 0.6 1.0 2.7 1.5 0.37 0.66 1.66 0.91
32 Structures 8.1 −7.7 3.9 −3.1 −4.0 −0.67 0.32 −0.26 −0.33
33 Motor vehicle output 2.8 1.3 −7.6 −7.6 32.6 0.04 −0.22 −0.21 0.78
34 GDP excluding motor vehicle output 97.2 1.1 3.4 2.3 1.2 1.05 3.32 2.23 1.14
  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 1.4 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

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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.

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)
2018 2019 2018 2019
IV I II III IV I II III
1 Gross domestic purchases1 1.5 0.8 2.2 1.4 1.5 0.8 2.2 1.4
2 Personal consumption expenditures 1.3 0.4 2.4 1.5 0.88 0.26 1.57 1.01
3 Goods −1.4 −1.6 1.6 −0.8 −0.29 −0.34 0.32 −0.16
4 Durable goods −1.1 −0.3 −1.8 −1.3 −0.08 −0.02 −0.12 −0.09
5 Nondurable goods −1.5 −2.3 3.3 −0.5 −0.21 −0.31 0.44 −0.07
6 Services 2.6 1.3 2.8 2.6 1.17 0.60 1.25 1.17
7 Gross private domestic investment 0.7 1.7 2.0 1.1 0.12 0.30 0.35 0.19
8 Fixed investment 0.5 1.8 2.0 1.2 0.09 0.30 0.33 0.20
9 Nonresidential 0.0 1.6 2.0 0.6 0.00 0.20 0.27 0.08
10 Structures 5.6 2.8 4.0 1.5 0.16 0.08 0.11 0.04
11 Equipment −1.1 1.0 0.4 −0.9 −0.06 0.06 0.02 −0.05
12 Intellectual property products −2.2 1.5 2.9 2.0 −0.10 0.07 0.13 0.09
13 Residential 2.5 2.6 1.7 3.3 0.09 0.09 0.06 0.12
14 Change in private inventories ...... ...... ...... ...... 0.03 0.00 0.02 −0.01
15 Government consumption expenditures and gross investment 2.9 1.3 1.7 1.1 0.48 0.22 0.29 0.18
16 Federal 2.8 4.6 −2.1 1.4 0.18 0.29 −0.14 0.09
17 National defense 1.8 1.1 1.5 1.4 0.07 0.04 0.06 0.05
18 Nondefense 4.3 10.0 −7.2 1.5 0.11 0.25 −0.19 0.04
19 State and local 2.9 −0.6 4.1 0.9 0.30 −0.06 0.43 0.09
Addenda:
  Gross domestic purchases:                
20 Food 0.2 3.0 0.7 −0.6 0.01 0.14 0.03 −0.03
21 Energy goods and services −4.9 −16.7 18.8 −8.0 −0.13 −0.49 0.47 −0.22
22 Excluding food and energy 1.7 1.2 1.8 1.8 1.59 1.14 1.71 1.64
  Personal consumption expenditures:                
23 Food and beverages purchased for off-premises consumption 0.2 3.0 0.6 −0.5 ...... ...... ...... ......
24 Energy goods and services −5.2 −16.7 18.4 −8.2 ...... ...... ...... ......
25 Excluding food and energy 1.7 1.1 1.9 2.2 ...... ...... ...... ......
26 Gross domestic product 1.6 1.1 2.4 1.7 ...... ...... ...... ......
27 Exports of goods and services −1.4 −2.5 3.3 −2.3 ...... ...... ...... ......
28 Imports of goods and services −1.8 −3.5 1.6 −3.3 ...... ...... ...... ......
  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, 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.

Table 3. Personal Income and Its Disposition
[Billions of dollars; quarterly estimates are seasonally adjusted at annual rates]
Line   Level Change from preceding period
2019 2018 2019
II III IV I II III
1 Personal income 18,599.6 18,772.4 154.3 272.6 244.2 172.8
2 Compensation of employees 11,436.8 11,549.6 63.1 249.2 130.3 112.7
3 Wages and salaries 9,320.3 9,411.2 47.8 221.5 108.8 90.9
4 Private industries 7,877.6 7,954.5 37.2 212.7 98.2 76.9
5 Goods-producing industries 1,549.1 1,559.0 10.6 37.3 23.8 9.8
6 Manufacturing 915.5 921.0 6.9 15.6 8.4 5.5
7 Services-producing industries 6,328.5 6,395.5 26.6 175.4 74.3 67.0
8 Trade, transportation, and utilities 1,409.1 1,420.4 6.8 30.4 5.6 11.4
9 Other services-producing industries 4,919.5 4,975.1 19.8 145.0 68.7 55.7
10 Government 1,442.7 1,456.7 10.6 8.8 10.7 14.0
11 Supplements to wages and salaries 2,116.5 2,138.4 15.3 27.7 21.5 21.9
12 Proprietors' income with IVA and CCAdj 1,632.9 1,680.6 34.4 −3.2 11.7 47.7
13 Farm 19.2 41.4 18.6 −11.1 −5.6 22.2
14 Nonfarm 1,613.7 1,639.2 15.8 7.9 17.4 25.5
15 Rental income of persons with CCAdj 777.2 781.0 −1.1 2.9 10.2 3.8
16 Personal income receipts on assets 3,016.5 3,001.2 44.3 −46.8 61.4 −15.3
17 Personal interest income 1,750.5 1,719.8 8.0 −27.9 51.2 −30.7
18 Personal dividend income 1,266.0 1,281.4 36.4 −19.0 10.2 15.4
19 Personal current transfer receipts 3,158.6 3,194.9 19.9 109.4 45.4 36.3
20 Government social benefits to persons 3,104.2 3,140.3 19.5 109.7 45.4 36.1
21 Social security 1,030.5 1,037.5 9.1 37.8 7.6 7.0
22 Medicare 793.6 809.9 17.9 20.3 18.7 16.3
23 Medicaid 631.4 643.2 −5.3 12.8 21.1 11.7
24 Unemployment insurance 25.9 25.8 −0.5 0.9 −1.0 −0.1
25 Veterans' benefits 118.4 120.1 1.9 4.6 2.0 1.7
26 Other 504.4 503.8 −3.6 33.5 −2.9 −0.5
27 Other current transfer receipts, from business (net) 54.4 54.6 0.4 −0.3 0.0 0.2
28 Less: Contributions for government social insurance 1,422.5 1,434.8 6.3 38.9 14.9 12.3
29 Less: Personal current taxes 2,208.4 2,199.6 −9.1 79.5 51.5 −8.9
30 Equals: Disposable personal income (DPI) 16,391.2 16,572.9 163.4 193.1 192.6 181.7
31 Less: Personal outlays 15,073.1 15,231.1 102.2 65.2 250.1 158.0
32 Equals: Personal saving 1,318.1 1,341.7 61.2 127.9 −57.4 23.7
33 Personal saving as a percentage of DPI 8.0 8.1 ...... ...... ...... ......
Addenda:
  Percent change at annual rate            
34 Current-dollar DPI ...... ...... 4.2 4.9 4.8 4.5
35 Real DPI, chained (2012) dollars ...... ...... 2.8 4.5 2.4 2.9
CCAdj
Capital consumption adjustment
IVA
Inventory valuation adjustment

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

Chart 4. Real Disposable Personal Income, bar chart

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Chart 5. Personal Saving Rate, bar chart

[Click chart to expand]

 

  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.”