GDP grows 3.5% in Q3 2018

Real U.S. GDP increased at an annual rate of 3.5 percent in the third quarter, according to the advance estimate from the Bureau of Economic Analysis.

Although still strong, the advance estimate indicated a deceleration in real GDP growth from the second quarter, which saw a 4.2 percent annualized increase. According to the BEA, the slowing “reflected a downturn in exports and a deceleration in nonresidential fixed investment.” Despite the deceleration, the second and third quarters provided the best back-to-back performance since 2014.

On a current-dollar basis, GDP increased $247.1 billion in third quarter 2018 to $20.66 trillion. In the second quarter, current-dollar GDP increased $370.0 billion.

While exports were weak, an effect of the ongoing trade uncertainty, personal consumption was strong. Personal consumption expenditures increased 4.0 percent in the third quarter. Consumers appear confident and poised to spend on the back of a strong labor market (the unemployment rate was 3.7 percent in September) and rising wages. Disposable personal income increased by $155.0 billion in the third quarter, and the personal saving rate — personal saving as a percentage of disposable personal income — was 6.4 percent.