U.S. GDP up 4.9% in third quarter, beating expectations

Oct. 26 (UPI) -- U.S. gross domestic product rose by an estimated annual rate of 4.9% in the third quarter of 2023, according to the Commerce Department's Bureau of Economic Analysis Thursday advance estimate report.

A second estimate of third-quarter GDP, based on more complete data, will be released Nov. 29.

In the second quarter GDP was up at an annual rate of 2.1%.

"The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment," the BEA said in a statement. "The increase in consumer spending reflected increases in both services and goods."

The third quarter GDP increase beat the Dow Jones consensus estimate of 4.7%. It comes as the Federal Reserve has piled up interest rate increases in a bid to cool the economy and reduce inflation.

Consumer spending was up across services and goods.

It grew for housing and utilities services, health care, financial services and accommodations. For goods, consumer spending was up for prescription drugs, recreational goods and vehicles.

There were downturns in nonresidential fixed investment and state and local government spending.

Personal income measured in current dollars was up by $199.5 billion. In the second quarter it grew by $239.6 billion.

Personal disposable income grew by 1.9%, increasing by $95.8 billion in the third quarter. Real personal income -- meaning after-tax income -- fell 1% compared with a second quarter increase of 3.5%.

The personal savings rate was up 3.8%, or $776.9 billion compared with a savings rate of 5.2% in the second quarter.

"Compared to the second quarter, the acceleration in real GDP in the third quarter reflected accelerations in consumer spending, private inventory investment, and federal government spending and upturns in exports and residential fixed investment," the BEA said. "These movements were partly offset by a downturn in nonresidential fixed investment and a deceleration in state and local government spending. Imports turned up."

The strong GDP numbers belied concerns over a possible recession.

U.S. inflation in September was at 3.7%, led by shelter costs and gasoline.