GDP Growth in the Third Quarter, Second Estimate – Inventory Investment, Blessing or Curse?

The Bureau of Economic Analysis (BEA) released the second estimate of real GDP growth for the third quarter of 2013. Real GDP growth was revised upward to a seasonally adjusted annual rate of 3.6%, from the advance estimate of 2.8%. Real GDP grew at annual rate of 2.5% in the second quarter and 1.1% in the first quarter.

The downside in last month’s advance estimate of GDP growth was that despite accelerating from 2.5% to 2.8% between the second and third quarters, overall growth was heavily reliant on inventory investment (0.8 of the 2.8 percentage points), and growth in personal consumption expenditures (PCE), typically 65%-70% of GDP, slowed.

Today’s upward revision provided more of the same. The 0.8 percentage point improvement in GDP growth (from 2.8% to 3.6%) was more than accounted for by the upward revision to inventory investment, bringing its contribution to 1.7 percentage points of the 3.6% growth. And the growth in PCE, was revised down to an annual rate of 1.4% from 1.5%.

We expect GDP growth to slow sharply in the fourth quarter with an inventory investment payback shaving 1.5 percentage points from growth, and possibly another 0.5 percentage points from growth in the first quarter of 2014.


Tags: , , ,

0 replies

  1. Woah this specific blog site is amazing i enjoy looking through your content regularly. Continue to be within the terrific work! You comprehend, a lot of everyone is looking circular for this information, you’ll be able to make them considerably.


  1. Eye on the Economy: New Home Sales Rise in October | Eye on Housing
  2. Eye on the Economy: New Home Sales Rise in October | Larry Miller Real Estate

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: