Economic growth in the third quarter was slower than previously thought, at a 2 percent annual rate, the Bureau of Economic Analysis reported Tuesday morning.
The third and final estimate of Gross Domestic Product was right in line with the estimates from private-sector economists polled by Bloomberg, who expected the third-quarter growth rate to be marked down from 2.1 percent to 2 percent.
Growth slowed significantly from the second quarter, when GDP grew at a 3.9 percent clip.
The dropoff, however, was due in part to companies spending less on inventory, a component of output that oscillates from month to month and generally is not predictive of future growth. The revisions released Tuesday showed that the decline in inventories was even bigger than initially thought.
Third-quarter growth was propelled in large part by consumer spending, which accounted for nearly all of the GDP increase. Business investment in buildings and machines and state and local government also added to output.
Part of the slowdown in the late summer appeared to be a continuation of the fallout from slowing growth in China and elsewhere overseas. Export growth slowed to a 0.7 percent rate, likely weighed down by the stronger dollar, which has made U.S. goods more expensive to buyers outside the country. Imports, which count against GDP, grew at a faster 2.3 percent clip, meaning that on net international trade subtracted about a quarter of a percentage point from GDP growth.
Signs in Tuesday’s report indicate that the underlying growth rate for the U.S. is stronger than the headline 2 percent.
A measure of GDP that excludes volatile inventories and includes only domestic purchasers, providing a sense of underlying U.S. demand, showed 3.2 percent growth. Meanwhile, Gross Domestic Income, which measures growth from the perspective of income rather than spending, showed a 2.7 percent annual growth rate. GDP and GDI, in theory, should be equal, but they are not because of difficulties in measuring output.
Commerce is expected to pick up next year. Officials at the Federal Reserve see GDP totaling 2.1 percent for the year in 2015, and then rising to 2.4 percent in 2016.
