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Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses third quarter GDP.
- Every quarter, the Bureau of Economic Analysis estimates the total production of the U.S. economic and net exports or the gross domestic product (GDP). This figure is then re-estimated twice and the 2nd estimate of GDP for the 3rd quarter was released this morning.
- This morning’s revision of real GDP for the 3rd quarter was lowered to 2.0% from 2.5% last month. The downward revision was attributed to further reductions in inventory investment as well as reduced estimates of personal consumption expenditures and non-residential fixed investment.
- Also released this morning was the 3rd quarter estimate of corporate profits, which rose by $34.6 billion from the 2nd quarter. Profits for both non-financial and financial companies slowed in the 3rd quarter, but remain healthy.
- GDP growth fell sharply in the 1st quarter of this year and has struggled to break out ever since. While this quarter’s revised rate of 2.0% is lower than expectations, the decline in inventory investment is likely to be compensated for in the 4th quarter as businesses need to re-stock. Thus, GDP growth in the 4th quarter is likely to strengthen over recent estimates. Furthermore, corporate profits remain healthy, which suggests that businesses are not likely to trim payrolls in the near term.
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