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U.S. GDP Grew At An Even Faster Pace Than Indicated in Q3
November 29, 2023
The U.S. economy grew at a faster pace than initially thought in the third quarter, as businesses invested more in warehouses and machinery equipment, but momentum appears to have since waned as higher borrowing costs curb hiring and spending.
Gross domestic product, a measure of all goods and services produced during the three-month period, accelerated at a 5.2% annualized pace, according to the Commerce Department’s second estimate. The acceleration topped the initial 4.9%. That was the fastest pace of expansion since the fourth quarter of 2021.
The upward revision to growth was primarily driven by upgrades to business investment on structures like warehouses and healthcare facilities. The category showed an increase of 1.3%, which still marked a sharp downward shift from previous quarters. Spending by state and local governments was also revised higher. Residential investment was also raised, thanks to the construction of more single-family homes, ending nine straight quarters of contraction in this category.
However, consumer spending saw a downward revision, now rising just 3.6%, compared with 4% in the initial estimate. At the same time, personal income was higher than initially estimated, accounting for increases in wages. The saving rate was also revised upward slightly to 4.0% from 3.8%.
The latest GDP report also contained mixed news on the inflation front. The personal consumption expenditures (PCE) index, which is the Federal Reserve’s preferred inflation gauge, increased 2.8% in the quarter, a downward revision of 0.1%. This was offset, however, by a 0.1% upward revision to the chain-weighted price index, which climbed to 3.6%.
