December 19, 2024
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The final estimate of third quarter GDP was 3.1% which is slightly higher than the preliminary estimate of 2.8%. This compares to GDP growth of 3.0% in the second quarter. Growth in the past year has been 2.7%
Final sales, which is GDP excluding the change in business inventories, rose 3.3% in the third quarter versus 1.9% in the second quarter Given an increase in GDP of 3.1% and a 3.3% increase in final sales, the change in inventories subtracted 0.2% from GDP growth in the second quarter.
Final sales to domestic purchasers which excludes both the change in inventories and trade rose 3.7% in the third quarter after climbing 2.8% in the second quarter. With a 3.3% increase in final sales and a 3.7% increase in final sales to domestic purchasers, the trade component subtracted 0.4% from GDP growth in the third quarter as exports rose 9.6% and imports rose 10.7%.
Consumption spending jumped 3.7% in the third quarter after having gained 2.8% in the second quarter. Consumers continue to shrug off inflation and still high interest rates, With real disposable income rising 2.7% in the past year and personal consumption expenditures rising 3.0%, consumers can continue to spend at a 2.5-3.0% growth rate in 2025. Spending on goods rose 5.6% in the third quarter while spending on services climbed by 2.8%.
Residential investment fell 4.3% in the third quarter after declining 2.8% in the second quarter. Builders clearly ramped production in the first quarter as mortgage rates quickly fell from nearly 7.5% to 6.8%. Apparently potential buyers are waiting for a further decline in interest rates before stepping back into the housing market.
The foreign sector as measured by the deficit for real net exports widened by $33.5 billion in the third quarter to $1,069.2 billion after widening by $58.7 billion in the second quarter. Exports rose 9.6% in the third quarter while imports climbed by 10.7%.
.Federal government spending jumped 7.5% in the third quarter after rising 4.3% in the second quarter. Defense spending rose 13.9% while nondefense spending gained 2.5%.
After having risen 2.8% in the third quarter we expect growth to be 2.5% in the fourth quarter.. The economy keeps cranking out jobs and wages keep rising which will allow consumer income and spending to grow rapidly.
Stephen Slifer
NumberNomics
Charleston, SC
Mr. Slifer –
The fed in last 3 months since the September spike has injected approximately $60 billion/month into the “repo” market, and plans to potentially add as much as another half trillion by mid January, according to reports in the Financial Times. Mr. Powell rejected comparisons of this with earlier Quantitative Easing, insisting it was different. Since the repo market is for overnight or short term loans, one assumes these massive amounts will be repaid promptly, though there has been no mention of that in the papers. Such massive amounts of money would seem to contribute to the bullish equity markets we’re seeing. Can you educate me as to how these injections of credit influence the market, GDP, etc?
Hi Frank,
Thanks for your comment and sorry for the delayed response. Your question is not an easy one to answer so rather than a lengthy explanation here I will respond to your personal e-mail address. Thanks for your question. it is a good one.
Steve
Steve –
The second graph in this section, “Final Sales”, has the x-axis mislabeled in regard
to the applicable dates.
Hi Frank. Merry Christmas. You are right. The data shown are for the dates I wanted, but somehow the x-axis was messed up. I changed it in the original. Thanks for the catch.
Steve