Highlights
- Q3 GDP surges to 5.2%, signaling economic growth.
- Investments and government spending drive GDP rise.
- Corporate profits and personal income see substantial increases.
Economic Expansion in Q3
The US economy exhibited remarkable growth in the third quarter of 2023, with real gross domestic product (GDP) climbing at an annual rate of 5.2%, a notable increase from the 2.1% expansion seen in the second quarter. This surge in GDP, based on more complete data than the earlier “advance” estimate, which pegged growth at 4.9%, signals robust economic activity.
Detailed Analysis of Growth
The upward revision in GDP growth chiefly reflects an increase in nonresidential fixed investment and higher state and local government spending. However, these were partially offset by a decrease in consumer spending, which remains a critical component of the economy. Imports, which negatively impact GDP calculations, were revised downwards.
Sector-Specific Contributions
The overall increase in real GDP was supported by several sectors. Consumer spending, private inventory investment, exports, and government spending all contributed positively. Notably, both residential and nonresidential fixed investments saw increases. The acceleration in GDP growth in Q3, compared to Q2, was primarily due to an increase in consumer spending and private inventory investment, along with an upswing in exports.
Financial Indicators and Inflation
The current dollar GDP saw a substantial rise of 8.9%, or $581.5 billion, reaching a level of $27.64 trillion. This represents an upward revision of $20.9 billion from the previous estimate. Inflation, as measured by the gross domestic purchases price index, remained stable at 3.0%. The Personal Consumption Expenditures (PCE) price index, a key indicator of inflation, increased by 2.8%, with a slight downward revision. Excluding volatile food and energy prices, the PCE price index also saw a minor downward revision, rising by 2.3%.
Personal Income and Corporate Profits
Current-dollar personal income increased significantly by $218.3 billion, with a revision of $18.8 billion upwards from the prior estimate. The increase in personal income was largely due to rises in compensation, nonfarm proprietors’ income, and personal interest income.
Disposable personal income also showed growth, while real disposable personal income saw a marginal increase. The personal saving rate was revised upwards to 4.0%. In terms of corporate profits, there was a considerable increase of $105.7 billion in the third quarter, contrasting with a modest rise in the previous quarter.
Gross Domestic Income and Future Outlook
The real gross domestic income (GDI) increased by 1.5% in Q3, compared with a 0.5% increase in Q2. Looking ahead, the substantial growth in both GDP and GDI, along with increasing corporate profits, paints an optimistic picture for the US economy as it moves towards the end of 2023.
This article was originally posted on FX Empire
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