The latest report from the Bureau of Economic Analysis reveals that the U.S. economy displayed robust growth in the third quarter of 2023, surpassing initial estimates and posting the strongest expansion since the fourth quarter of 2021.
The second estimate indicates that the annualized GDP growth rate for Q3 2023 stood at 5.2%, outpacing the preliminary figure of 5%.
Key Revisions To Q3 GDP
One of the notable revisions in this report was in nonresidential investment, which was originally estimated to have fallen by 0.1%. However, it was updated to show a surprising 1.3% increase.
This upward revision can be attributed to a smaller decline in equipment (-3.5% compared to the initial estimate of -3.8%) and a remarkable surge of 6.9% in structures (versus the initial estimate of 1.6%), led by commercial and health care (mainly warehouses).
Furthermore, the residential investment sector exhibited stronger signs of growth. It recorded a growth rate of 6.2%, significantly higher than the initially anticipated 3.9%, marking its first positive growth in nearly two years.
Private inventories also made a significant contribution to the overall growth, adding 1.4 percentage points to the GDP, surpassing the previous estimate of 1.32 percentage points. Government spending experienced faster growth as well, expanding by 5.5% compared to the earlier estimate of 4.6%.
Consumer spending, although slightly lower than the preliminary estimate (3.6% versus 4%), still posted its most substantial gain since Q4 2021. The moderation in consumer spending was primarily attributed to a slowdown in services spending. Exports surged by 6%, albeit slightly below the initial estimate of 6.2%, while imports increased at a slower rate, growing by 5.2% compared to the initial estimate of 5.7%.
The acceleration in GDP for Q3 2023, when compared to the previous quarter, can be attributed to increased consumer spending, private inventory investment, and a notable uptick in exports.
Economist Takeaways: Not A Christmas Wish For The Stock Market
“Although the headline numbers were revised higher and look rosy, it is concerning that consumer spending is starting to roll over,” Jamie Cox, managing partner for Harris Financial Group, commented.
Cox believes that U.S. consumers are now feeling the impact of rising…
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