The U.S. economy grew at a solid pace in the third quarter of 2023, boosted by strong consumer spending and government spending. According to the “advance” estimate released by the Bureau of Economic Analysis (BEA), real gross domestic product (GDP) expanded at an annual rate of 2.8% in the third quarter of 2024, following a 3.0% gain in the second quarter of 2024. This quarter’s growth matched NAHB’s forecast.
Furthermore, the data from the GDP report suggests that inflation is cooling. The GDP price index rose 1.8% for the third quarter, down from a 2.5% increase in the second quarter of 2024. The Personal Consumption Expenditures Price (PCE) Index, which measures inflation (or deflation) across various consumer expenses and reflects changes in consumer behavior, rose 1.5% in the third quarter. This is down from a 2.5% increase in the second quarter of 2024.
This quarter’s increase in real GDP primarily reflected increases in consumer spending, exports, and federal government spending.
Consumer spending, the backbone of the U.S. economy, rose at an annual rate of 3.7% in the third quarter. It marks the highest annual growth rate since the first quarter of 2023. The increase in consumer spending reflected increases in both goods and services. While goods spending increased at a 6.0% annual rate, expenditures for services increased 2.6% at an annual rate.
The U.S. trade deficit increased in the third quarter, as imports increased more than exports. A wider trade deficit shaved 0.56 percentage points off GDP. Imports, which are a subtraction in the calculation of GDP, increased 11.2%, while exports rose 8.9%.
In the third quarter, federal government spending increased 9.7%, led by a 14.9% surge in national defense outlays.
Nonresidential fixed investment increased 3.3% in the third quarter. Increases in equipment and intellectual property products were partly offset by a decrease in structures. Meanwhile, residential fixed investment decreased 5.1% in the third quarter and dragged down the contribution to real GDP by 0.21 percentage points. Within residential fixed investment, single-family structures declined 16.1% at an annual rate, multifamily structures decreased 8.7%, while improvements rose 13.9%.
For the common BEA terms and definitions, please access bea.gov/Help/Glossary.
2 Responses
After the BLS overstated new jobs by over 800,000 on an election year, I have zero confidence in any economic reports generated by this administration.
The phrase “real gross domestic product expanded at an annual rate of 2.8%” caught my attention, as it highlights the ongoing growth of the U.S. economy. As someone who has lived and worked in various countries, I’ve noticed that consumer spending can be a significant driver of economic growth, especially when it comes to discretionary spending on housing and related services. In my experience, a growth rate of around 2-3% can be a sweet spot for many economies, as it allows for moderate expansion without overheating. The parallel between this growth rate and that of other European countries is something I have been thinking about because I’ve seen how similar rates can have vastly different impacts depending on the local context and cultural factors. I wonder if the author considers the potential implications of this growth rate on international trade and investment, particularly in regions with slower economic growth.