U.S. GDP Grew 3.1% in Q3; Gov't Spending Made First Contribution in 3 Years

December 20, 2012 9:01 AM EST
U.S. gross domestic product (GDP) grew more than previously expected, according to latest data out of the Bureau of Economic Analysis today.

GDP grew 3.1 percent from the second to third quarter, up from prior estimates and the current consensus of 2.7 percent growth.

According to the BEA, "The third estimate has not greatly changed the general picture of the economy for the third quarter except that personal consumption expenditures (PCE) is now showing a modest pickup, and imports is now showing a downturn."

Continuing, "The increase in real GDP in the third quarter primarily reflected positive contributions from PCE, private inventory investment, federal government spending, residential fixed investment, and exports that were partly offset by a negative contribution from nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased.

"The acceleration in real GDP in the third quarter primarily reflected upturns in private inventory investment and in federal government spending, a downturn in imports, an upturn in state and local government spending, and an acceleration in residential fixed investment that were partly offset by a downturn in nonresidential fixed investment and a deceleration in exports."

Consumer spending increased by 2 points to 1.6 percent while the gap between imports and exports narrowed to 0.38 points of growth.

State and government spending added 0.04 points to GDP, which was the first contribution since the third-quarter of 2009.

Hoping to aid growth is the Fed, which announced expansion of asset purchases into FY13. The FOMC also said it would consider raising rates once unemployment is at or below 6.5 percent, the first time the agency attributed a specific metric to the outlook.

U.S. markets are mixed in early trading, the S&P 500 and Nasdaq higher, while the Dow Jones Industrial Average is seeing some early pressure.

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