Revised 3rd Quarter GDP Figures Show a Further Slowing

The U.S. Commerce Department's Bureau of Economic Analysis' second look at the 3rd quarter economy shows an slower economy than first thought, with the overall Gross Domestic Product (GDP) figure ticking down to a 2.4 percent gain, slightly lower than the 2.7 percent figure announced last month in the Bureau's pr

The U.S. Commerce Department's Bureau of Economic Analysis' second look at the 3rd quarter economy shows an slower economy than first thought, with the overall Gross Domestic Product (GDP) figure ticking down to a 2.4 percent gain, slightly lower than the 2.7 percent figure announced last month in the Bureau's preliminary 3rd-quarter numbers, and the slowest pace in four years. The GDP figures reflect the total output of goods and services produced in the U.S.

Wes Basel, senior economist at Economy.com, notes that the figures show "somewhat weaker investment spending, but not alarmingly so. We already knew it was decelerating because new orders were lower; this report did not give us a lot of new information." Basel adds that much of the strength in investment spending was in the computer sector and "in that sector price cuts have widened. Plus, aircraft is always volatile sector, but it's been especially so recently."

The downward revision to the percentage change in real GDP primarily reflected an upward revision to imports and downward revisions to equipment and software and to change in private inventories that were partly offset by upward revisions to nonresidential structures and to state and local government spending:

  • Real personal consumption expenditures increased 4.5 percent in the third quarter, compared with an increase of 3.1 percent in the second. 
  • Real nonresidential fixed investment increased 7.8 percent, compared with an increase of 14.6 percent. 
  • Nonresidential structures increased 14.9 percent, compared with an increase of 4.4 percent. 
  • Equipment and software increased 5.8 percent, compared with an increase of 17.9 percent. Real residential fixed investment decreased 10.5 percent, in contrast to an increase of 1.3 percent.
  • Real exports of goods and services increased 15.4 percent in the third quarter, compared with an increase of 14.3 percent in the second. 
  • Real imports of goods and services increased 17.4 percent, compared with an increase of 18.6 percent.
  • Real federal government consumption expenditures and gross investment decreased 9.0 percent in the third quarter, in contrast to an increase of 17.2 percent in the second. 
  • National defense spending decreased 9.6 percent, in contrast to an increase of 16.9 percent.
  • Nondefense spending decreased 8.0 percent, in contrast to an increase of 17.8 percent. Real state and local government consumption expenditures and gross investment increased 2.7 percent, in contrast to a decrease of 1.1 percent.
  • The real change in private inventories subtracted 0.18 percentage point from the third-quarter change in real GDP, after adding 1.73 percentage points to the second-quarter change. 
  • Private businesses increased inventories $73.5 billion in the third quarter, following increases of $78.6 billion in the second quarter and $36.6 billion in the first.
  • Real final sales of domestic product increased 2.6 percent in the third quarter, compared with an increase of 3.9 percent in the second.

Latest GDP Figures at a Glance

 

3Q 1999

4Q 1999

1Q 2000

2Q 2000

3Q 2000
(revised)

Overall GDP

5.7%

8.3%

4.8%

5.6%

2.4%

Durable Goods

8.0%

13.0%

23.6%

-5.0%

8.1%

Non-residential investment

11.8%

9.5%

21.0%

14.6%

7.8%

Exports

10.2%

10.3%

6.3%

14.3%

15.4%

Imports

16.9%

10.7%

12.0%

18.6%

17.4%

Gov't Consumption

4.8%

8.5%

-1.1%

4.8%

-1.5%

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