The nation's economy slowed down markedly in the third quarter, according to data furnished by the U.S. Commerce Department. To wit the advance report on the gross domestic product, which was issued within the past hour, showed that the economy had pushed forward by just 1.5% over the summer months. Although that was a tad better than the 1.4% rate of growth expected, it paled against the second-quarter gain of 3.9%.
All told, real gross domestic product--the value of the goods and services produced by the nation's economy--increased by 1.5% in the latest three months. The GDP was helped by positive contributions from personal consumption expenditures, state and local government spending, and nonresidential fixed investment.
Growth, meantime, was hampered by a lessening in inventory accumulation, versus the preceding three months, and by an increase in import penetration. Rising imports detract from economic output in our country. Note that this was the advance report on GDP. Two other releases, the preliminary and final issuances, will be issued, respectively on November 29th and December 22nd.
Meanwhile, although the headline number was weaker, consumer spending held up well, advancing by a solid 3.2% in the latest period. It seems that the big reason for the falloff in GDP growth was that many manufacturers allowed their inventories to run down somewhat, after a large accumulation of such stores of goods earlier in the year. We would look for some greater accumulation in the current span.
Overall, we would expect growth to perk up in the current three months, when, buoyed by a pickup in inventories and continued decent consumer spending, the nation's gross domestic product should gain about 2.0%-2.5%. One key to this quarter's showing could well be the performance of the employment sector. We will get the next look at this critical category on November 6th, when the Labor Department will report on the nation's non-farm payrolls for October.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.