In its first release of Q3 GDP, the BEA announced that the US economy grew 1.5% at a seasonally-adjusted, annual rate.  That’s versus Wall Street expectations for a 1.6% QoQ SAAR rate, and a previous rate of 3.9% QoQ SAAR.  Below we present our breakdown of the contributions to growth.  All terms are presented in QoQ SAAR terms as a contribution to total GDP growth.  For instance, consumption added 2.19% to growth, versus 2.42% previously, a net swing of -0.21% for that category.  We’ve included notes for each category and have additional commentary below.

Coming in to this report, investment was widely expected to fall sharply, driven entirely by inventory destocking.  The -1.44% weight (subtraction from growth) for inventory drawdowns was actually slightly better than many estimates.  Trade was also expected to be very weak, but softer import figures led to a smaller weight on overall growth than had been estimated.  We note that the weaker import numbers may have contributed somewhat to a slight miss in consumption; if imports don’t make it to shelves, consumers can’t buy goods!  Government was slightly weaker versus Q2.  Bottom line figures were a bit “meh”; ex-inventories, GDP rose almost 3% QoQ SAAR, a respectable clip, while backing out government and trade spending showed a slightly weaker picture.  We’ll be watching consumption stats going forward and expect some upward revision to that line item; the same is true for investment.  Overall this report was neither weak nor strong relative to expectations, with some minor upside surprises in trade and inventories offsetting some minor downside surprises in fixed investment, consumption, and government.


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