Statement on the Second Estimate of Gross Domestic Product for the Third Quarter of 2016

 

WASHINGTON, DC – Jason Furman, Chairman of the Council of Economic Advisers, issued the following statement today on the second estimate of GDP for the third quarter of 2016.

Summary: Real GDP grew 3.2 percent at an annual rate in the third quarter according to BEA’s second estimate.

Third-quarter economic growth was revised up 0.3 percentage point to 3.2 percent at an annual rate, a noticeably faster pace than in the first half of the year. Exports, which have faced substantial headwinds in recent years from slow growth abroad, grew at an annual rate of 10.1 percent in the third quarter, boosted in part by transitory factors. Consumer spending continued to grow at a solid pace in the third quarter, while inventory investment (one of the most volatile components of GDP) boosted GDP growth after subtracting from it in the prior five quarters. Third-quarter growth in the most stable and persistent components of output—consumption and fixed investment—was revised up to 2.1 percent. Still, more work remains to strengthen economic growth and to ensure that it is broadly shared, including promoting greater competition across the economy; supporting innovation; increasing investments in infrastructure; and opening new markets to U.S. exports.

FIVE KEY POINTS IN TODAY'S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS (BEA)

1. Real gross domestic product (GDP) increased 3.2 percent at an annual rate in the third quarter of 2016, according to BEA’s second estimate. Real consumer spending grew a solid 2.8 percent in the third quarter following its strong second-quarter growth of 4.3 percent, with robust growth in durable goods spending and a small contraction in nondurable goods spending. Inventory investment—one of the most volatile components of GDP—added 0.5 percentage point to GDP growth in the third quarter after subtracting 1.2 percentage point in the second quarter. Residential investment declined for the second quarter in a row, though at a slower pace in the third quarter than in the second. Notably, exports grew 10.1 percent at an annual rate in the third quarter, its fastest quarterly growth since late 2013, boosted by a jump in agricultural exports (see point 4 below). 

Real gross domestic income (GDI)—an alternative measure of output—increased 5.2 percent at an annual rate in the third quarter. (In theory, GDP and GDI should be equal, but in practice they usually differ because they use different data sources and methods.) The average of real GDP and real GDI, which CEA refers to as real gross domestic output (GDO), increased 4.2 percent at an annual rate in the third quarter. CEA research suggests that GDO is a better measure of economic activity than GDP (though not typically stronger or weaker). 

Click here for the complete statement. 

Source: The White House, Office of the Press Secretary