3Q2019 Gross Domestic Product: Second Estimate

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In its second estimate of 3Q2019 gross domestic product (GDP), the Bureau of Economic Analysis (BEA) bumped the growth rate of the U.S. economy to a seasonally adjusted and annualized rate (SAAR) of +2.13%, up 0.2 percentage point (PP) from the “advance” estimate (“3Qv1”) and +0.12PP from 2Q2019.

Two of the four GDP component groupings -- personal consumption expenditures (PCE) and government consumption expenditures (GCE) -- contributed to 3Q growth; private domestic investment (PDI) and net exports (NetX) detracted from it.

The headline increase stemmed mostly from upward revisions to subcategories of PDI -- especially inventories (+0.22PP) and investment in nonresidential structures (+0.11PP). Meanwhile, consumer spending was little changed at +1.97PP. Exports rose a bit faster (+0.02PP), but were more than offset by the change in imports (-0.05PP).

The BEA's real final sales of domestic product was revised modestly downward (-0.02PP, to +1.96%), which is -0.96PP from 2Q. 

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“Except for the inventory number, most of this report's changes can be characterized as statistical noise,” wrote Consumer Metric Institute’s Rick Davis, who added the following “take-aways” from the report:

-- The improved headline growth came from growing inventories. That is not a good economic signal in and of itself, and it does not reflect improved domestic consumption.

-- The material drop from 2Q’s greater than +3% growth in consumer spending for goods and services was confirmed.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.