The US economy grew faster than initially expected in the third quarter of 2019, according to the "second" estimate released by the Bureau of Economic Analysis (BEA) on Wednesday (Nov. 27). Gross domestic product (GDP) increased at a 2.1% annualised rate. That was up from the initial reading of 1.9%, and more than the 2% growth rate in the second quarter.
The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), federal government spending, residential investment, private inventory investment, exports, and state and local government spending that were partly offset by a negative contribution from nonresidential fixed investment, BEA said.
Real gross domestic income (GDI) increased 2.4 percent in the third quarter, compared with an increase of 0.9 percent (revised) in the second quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.3 percent in the third quarter, compared with an increase of 1.4 percent in the second quarter.
Current dollar GDP increased 3.8 percent, or $201.8 billion, in the third quarter to a level of $21.54 trillion. In the second quarter, GDP increased 4.7 percent, or $241.4 billion. The price index for gross domestic purchases increased 1.4 percent in the third quarter, compared with an increase of 2.2 percent in the second quarter.
The PCE price index increased 1.5 percent, compared with an increase of 2.4 percent. Excluding food and energy prices, the PCE price index increased 2.1 percent, compared with an increase of 1.9 percent.
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $4.6 billion in the third quarter, compared with an increase of $75.8 billion in the second quarter.
Profits of domestic financial corporations decreased $9.8 billion in the third quarter, in contrast to an increase of $2.5 billion in the second quarter. Profits of domestic nonfinancial corporations increased $7.9 billion, compared with an increase of $34.7 billion. Rest-of-the-world profits increased $6.5 billion, compared with an increase of $38.7 billion. In the third quarter, receipts decreased $9.1 billion, and payments decreased $15.6 billion.
The upbeat fresh data helped support US stocks as it pointed to an economy on solid footing,
Meanwhile, the Federal Reserve Bank (Fed) of Atlanta forecast GDP will grow at a 1.7% rate in the fourth quarter of fiscal 2019. Also, the Fed released its Beige Book saying the US economy expanded modestly in the past month and a half.