3Q2022 Gross Domestic Product: Third Estimate

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In its third estimate of 3Q2022 gross domestic product (GDP), the Bureau of Economic Analysis (BEA) fine-tuned the growth rate of the U.S. economy to a seasonally adjusted and annualized rate (SAAR) of +3.25% (+2.9% expected), up 0.32 percentage point (PP) from the second estimate (“3Qv2”) and +3.83PP from 2Q2022.

As with prior 3Q reports, three groupings of GDP components -- personal consumption expenditures (PCE), net exports (NetX), and government consumption expenditures (GCE) -- contributed positively to the headline. That combination was partially offset by private domestic investment (PDI). The updated estimates primarily reflected upward revisions to consumer spending and nonresidential fixed investment that were partly offset by a downward revision to private inventory investment.

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As for details (all relative to 3Qv2):

PCE. The upward revision to consumer spending (+$18.7 billion, chained 2012 dollars) was led by services (+$19.8B). Other services (+$10.9B) and financial services and insurance (+$8.1B) dominated the services category. Spending on goods receded (-$2.6B); furnishings and durable household equipment (-$1.1B) and recreational goods and vehicles (-$0.9B) were the top movers in this category.

PDI. Inventories (-$10.9B) dominated the downward revision to PDI. This was partially offset by upward revisions to nonresidential structures (+$3.8B) and intellectual property products (+$3.2B).

NetX. Exports were trimmed by $4.2B while imports slipped marginally (-$0.1B).

GCE. Upward revisions to state and local gross investment (+$3.7B) dominated this line item.

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Consumer Metrics Institute’s Rick Davis summarized the key points of this report as follows:

-- As a stand-alone quarter, 3Q2022 seems to be showing comfortable growth. Normally, we should be very pleased.

-- That said, wildly different measurements of quarterly inflation make any estimates of “real” growth extremely difficult.

“In short,” Davis concluded, “the optimism that can be drawn from this report should be, at best, somewhat guarded.”

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.