Tuesday, December 23, 2014

Biggest GDP Growth in More Than a Decade

Ken O’Brien

Real gross domestic product -- the value of the production of goods and services in the United   States, adjusted for price changes -- increased at an annual rate of 5.0 percent in the third quarter of 2014, according to the "third" estimate released by the Bureau of Economic Analysis. The number marks the strongest pace of U.S. economic growth since the third quarter of 2003. The Dow Jones Industrial Average also traded above 18000 for the first time on Tuesday. In the second quarter, real GDP increased 4.6 percent. 

      The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month.  In the second estimate, the increase in real GDP was 3.9 percent.  With the third estimate for the third quarter, both personal consumption expenditures (PCE) and nonresidential fixed investment increased more than previously estimated .

      The increase in real GDP in the third quarter primarily reflected positive contributions from PCE, nonresidential fixed investment, federal government spending, exports, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased. 

      The acceleration in the percent change in real GDP reflected a downturn in imports, an upturn in federal government spending, and an acceleration in PCE that were partly offset by a downturn in private inventory investment and decelerations in exports, in state and local government spending, in residential fixed investment, and in nonresidential fixed investment.

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