The U.S. economy grew at its slowest pace in about three years in the third quarter, finally feeling the impact of a slowing housing market.
The Commerce Department said Friday that gross domestics product – the output of goods and services in the U.S. - rose by 1.6 percent on annual basis in the third quarter, versus the 2.6 percent in the previous quarter and slowest rate since the first quarter of 2003.
Commerce said the increase in real GDP in the quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, equipment and software, nonresidential structures, and state and local government spending that were partly offset by a negative contribution from residential fixed investment.
Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in GDP growth came on an acceleration in imports, a downturn in private inventory investment, a larger decrease in residential fixed investment, and decelerations in PCE for services and in state and local government spending that were partly offset by upturns in PCE for durable goods, in equipment and software, and in federal government spending.
Motor vehicle output contributed 0.72 percentage point to the third-quarter growth in real GDP after subtracting 0.31 percentage point from the second-quarter growth.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.0 percent in the third quarter, compared with an increase of 4.0 percent in the second. Excluding food and energy prices, the price index for gross domestic purchases increased 1.9 percent in the third quarter, compared with 2.9 percent in the second.
Real personal consumption expenditures increased 3.1 percent in the third quarter, compared with an increase of 2.6 percent in the second. Durable goods increased 8.4 percent, in contrast to a decrease of 0.1 percent. Nondurable goods increased 1.6 percent, compared with an increase of 1.4 percent.