BEA Revises Third Quarter 2019 GDP Growth Downward To 2.09%

In their third and final estimate of the US GDP for the third quarter of 2019, the Bureau of Economic Analysis (BEA) reported that the US economy was growing at a +2.09% annual rate, down -0.04 percentage points (pp) from their previous estimate but still up 0.08pp from the prior quarter.

Although the headline number changed by only -0.04pp, there were two material shifts in the composition of that number. The growth rate for consumer spending on services was revised upward by +0.22pp to +1.02%, while the growth rate for inventories was revised downward by a nearly offsetting -0.20pp to -0.03%. The only other material adjustment in the report was for the growth rate of consumer spending on goods, which was revised downward by -0.08pp to +1.09%.

Annualized household disposable income was revised $2 higher than in the previous report, and the household savings rate was reported to be 7.8%, down -0.1pp from the previous report.

For this estimate the BEA assumed an effective annualized deflator of 1.72%. During the same quarter the inflation recorded by the Bureau of Labor Statistics (BLS) in their CPI-U index was lower at 1.66%. Over estimating inflation results in pessimistic growth rates, and if the BEA's nominal data was deflated using CPI-U inflation information the headline growth number would have been 2.18%.

Among the notable items in the report :

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