The American economy continues its rebound with annualised economic growth of 4.9 per cent in the September third quarter, based on estimates released by the US Bureau of Economic Analysis (BEA) on Thursday (October 26).

The annualised growth rate up to the previous second quarter was 2.1 percent. For the third quarter, the BEA says, “the increase in real GDP (Gross Domestic Product) reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment.”

This was partly offset by a decrease in non-residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. The increase in consumer spending reflected increases in both services and goods. 

Leading services contributors

Within services, the leading contributors were housing and utilities, health care, financial services and insurance, and food services and accommodations. Within goods, the leading contributors to the increase were other non-durable goods (led by prescription drugs) as well as recreational goods and vehicles. 

The increase in private inventory investment reflected increases in manufacturing and retail trade. Within non-residential fixed investment, a decline in equipment was partly offset by increases in intellectual property products and structures.

Current dollar GDP went up 8.5 percent at an annual rate, or US$560.5 billion in the third quarter to a level of US$27.62 trillion. In the second quarter, GDP increased 3.8 per cent, or US$249.4 billion.

The price index for gross domestic purchases increased 3.0 per cent in the third quarter, compared with an increase of 1.4 per cent in the second quarter. The personal consumption expenditures (PCE) price index went up 2.9 per cent, compared with an increase of 2.5 percent. 

Excluding food and energy prices, the PCE price index increased 2.4 per cent, compared with an increase of 3.7 per cent.

Personal income

Current-dollar personal income increased US$199.5 billion in the third quarter, compared with an increase of US$239.6 billion in the second quarter. The increase reflected increases in compensation, proprietors’ income, personal income receipts on assets, and rental income of persons that were partly offset by a decrease in personal current transfer receipts.

Disposable personal income inched up US$95.8 billion, or 1.9 per cent, in the third quarter, compared with an increase of US$296.5 billion, or 6.1 per cent, in the second quarter. Real disposable personal income declined 1.0 per cent, in contrast to an increase of 3.5 per cent.

Personal saving was US$776.9 billion in the third quarter, compared with US$1.04 trillion in the second quarter. The personal saving rate—personal saving as a percentage of disposable personal income—was 3.8 per cent in the third quarter, compared with 5.2 per cent in the second quarter.