US economic growth was revised higher for the third quarter on Wednesday, putting it at its highest annualized rate since the first quarter after upward revisions were made to private inventory investment and personal consumption expenditures, government data showed Wednesday.
Gross domestic product rose by 2.1% in the penultimate quarter of the year, according to the most recent estimate released by the Bureau of Economic Analysis. This was above the bureau’s earlier estimate of 1.9% growth in GDP and was also ahead of the consensus estimate of analysts polled by Econoday for growth of 1.9%.
Over the past four years, the highest quarterly rates of annualized GDP growth occurred in the fourth quarter of 2017 and the second quarter of 2018, with both rates approaching 3.5%.
The upward revision to the percent change in real GDP in the third quarter reflected upward revisions to private inventory investment, nonresidential fixed investment, and personal consumption expenditures that were partly offset by a downward revision to state and local government spending, the bureau said in its statement.
“More slowing is likely occurring in Q4, although we caution against reading much into tracking model estimates
like the Atlanta Fed series at this point of the quarter,” Jim O’Sullivan, Chief US economist at High Frequency Economics, said. “Our forecast for the Q4 growth rate is 1.5%. Core inflation was above 2% in Q3, but the one-year change is still tame at 1.7%. We see a good chance that the one-year change will edge down to 1.6% after rounding in the October data.”
“The details were broadly encouraging as well as personal consumption was revised 0.1% higher to 2.9%,” Jon Hill, vice president within the US rates strategy team at BMO Capital Markets, said. “That said, echoing the long-running theme, core PCE [personal consumption expenditures] moderated to 2.1% from 2.2%. Still above target, but drifting the wrong way.”