The stock market is a leading indicator of economic activity. People wonder why the market is continuing to hit new highs almost daily?
The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, nonresidential fixed investment, exports, and federal government spending. These increases were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).
The deceleration in real GDP growth in the third quarter primarily reflected decelerations in PCE, in nonresidential fixed investment, and in exports that were partly offset by an acceleration in private inventory investment and a downturn in imports.
Current-dollar GDP increased 5.2 percent, or $245.5 billion, in the third quarter to a level of $19,495.5 billion. In the second quarter, current-dollar GDP increased 4.1 percent, or $192.3 billion (table 1 and table 3).
The price index for gross domestic purchases increased 1.8 percent in the third quarter, compared with an increase of 0.9 percent in the second quarter (table 4). The PCE price index increased 1.5 percent, compared with an increase of 0.3 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 0.9 percent (appendix table A).
Current-dollar personal income increased $113.7 billion in the third quarter, compared with an increase of $119.1 billion in the second. The deceleration in personal income primarily reflected decelerations in personal dividend income, in rental income, and in wages and salaries that were offset by an acceleration in government social benefits, a smaller decrease in personal interest income, an acceleration in nonfarm proprietors’ income, and a smaller decrease in farm proprietors’ income.
Disposable personal income increased $73.6 billion, or 2.1 percent, in the third quarter, compared with an increase of $125.1 billion, or 3.6 percent, in the second. Real disposable personal income increased 0.6 percent, compared with an increase of 3.3 percent.
Personal saving was $494.8 billion in the third quarter, compared with $545.6 billion in the second. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 3.4 percent in the third quarter, compared with 3.8 percent in the second.
Definitions
Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production. GDP is also equal to the sum of personal consumption expenditures, gross private domestic investment, net exports of goods and services, and government consumption expenditures and gross investment.
Current-dollar estimates are valued in the prices of the period when the transactions occurred—that is, at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.” Real values are inflation-adjusted estimates—that is, estimates that exclude the effects of price changes. The gross domestic purchases price index measures the prices of final goods and services purchased by U.S. residents.
The personal consumption expenditure price index measures the prices paid for the goods and services purchased by, or on the behalf of, “persons.”
Personal income is the income received by, or on behalf of, all persons from all sources: from participation as laborers in production, from owning a home or business, from the ownership of financial assets, and from government and business in the form of transfers. It includes income from domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or losses.
Disposable personal income is the income available to persons for spending or saving. It is equal to personal income less personal current taxes.
Personal outlays is the sum of personal consumption expenditures, personal interest payments, and personal current transfer payments.
Personal saving is personal income less personal outlays and personal current taxes.
The personal saving rate is personal saving as a percentage of disposable personal income. (For a comparison of personal saving in BEA's national income and product accounts (NIPAs) with personal saving in the Federal Reserve Board's financial accounts of the United States, go to www.bea.gov/national/nipaweb/nipa-frb.asp.
- The U.S. economy unexpectedly maintained a brisk pace of growth in the third quarter.
- An increase in inventory investment and a smaller trade deficit offset a hurricane-related slowdown in consumer spending and a decline in construction.
- Gross domestic product increased at a 3.0 percent annual rate in the July-September period after expanding at a 3.1 percent pace in the second quarter
The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, nonresidential fixed investment, exports, and federal government spending. These increases were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).
The deceleration in real GDP growth in the third quarter primarily reflected decelerations in PCE, in nonresidential fixed investment, and in exports that were partly offset by an acceleration in private inventory investment and a downturn in imports.
Current-dollar GDP increased 5.2 percent, or $245.5 billion, in the third quarter to a level of $19,495.5 billion. In the second quarter, current-dollar GDP increased 4.1 percent, or $192.3 billion (table 1 and table 3).
The price index for gross domestic purchases increased 1.8 percent in the third quarter, compared with an increase of 0.9 percent in the second quarter (table 4). The PCE price index increased 1.5 percent, compared with an increase of 0.3 percent. Excluding food and energy prices, the PCE price index increased 1.3 percent, compared with an increase of 0.9 percent (appendix table A).
Current-dollar personal income increased $113.7 billion in the third quarter, compared with an increase of $119.1 billion in the second. The deceleration in personal income primarily reflected decelerations in personal dividend income, in rental income, and in wages and salaries that were offset by an acceleration in government social benefits, a smaller decrease in personal interest income, an acceleration in nonfarm proprietors’ income, and a smaller decrease in farm proprietors’ income.
Disposable personal income increased $73.6 billion, or 2.1 percent, in the third quarter, compared with an increase of $125.1 billion, or 3.6 percent, in the second. Real disposable personal income increased 0.6 percent, compared with an increase of 3.3 percent.
Personal saving was $494.8 billion in the third quarter, compared with $545.6 billion in the second. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 3.4 percent in the third quarter, compared with 3.8 percent in the second.
Definitions
Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production. GDP is also equal to the sum of personal consumption expenditures, gross private domestic investment, net exports of goods and services, and government consumption expenditures and gross investment.
Current-dollar estimates are valued in the prices of the period when the transactions occurred—that is, at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.” Real values are inflation-adjusted estimates—that is, estimates that exclude the effects of price changes. The gross domestic purchases price index measures the prices of final goods and services purchased by U.S. residents.
The personal consumption expenditure price index measures the prices paid for the goods and services purchased by, or on the behalf of, “persons.”
Personal income is the income received by, or on behalf of, all persons from all sources: from participation as laborers in production, from owning a home or business, from the ownership of financial assets, and from government and business in the form of transfers. It includes income from domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or losses.
Disposable personal income is the income available to persons for spending or saving. It is equal to personal income less personal current taxes.
Personal outlays is the sum of personal consumption expenditures, personal interest payments, and personal current transfer payments.
Personal saving is personal income less personal outlays and personal current taxes.
The personal saving rate is personal saving as a percentage of disposable personal income. (For a comparison of personal saving in BEA's national income and product accounts (NIPAs) with personal saving in the Federal Reserve Board's financial accounts of the United States, go to www.bea.gov/national/nipaweb/nipa-frb.asp.
