US gross domestic product (GDP) economic growth fell sharply in the third quarter as firms' inventories fell and the pace of spending by consumers, businesses and governments all decelerated. Today's estimate is the first of three and also in the third quarter new jobs added in the economy slowed after 18 months of jobs gains by an average of more than 200,000 jobs per month. 

 

Real (inflation-adjusted) GDP increased at an annualised 1.5% in the third quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.9%.

The big factor in the quarter was the fall in inventories, which partly reflects the lower commodity prices and the strength of the US dollar. The BEA said the change in private inventories cut 1.44% off the quarterly growth rate but the impact may be temporary.

GDP highlights: The third-quarter increase in real GDP mainly reflected a rise in consumer spending. Spending on services increased, notably on health care; Spending on nondurable and durable goods also rose.

State and local government spending, business investment, exports, and residential investment also contributed to the increase in GDP. Partly offsetting these contributions to GDP growth, private inventory investment fell, mainly in wholesale trade and in manufacturing.

Final sales of domestic product — GDP less inventory investment — increased 3.0% in the third quarter.

Personal income and saving: Real disposable personal income (DPI), which adjusts for taxes and inflation, rose 3.5% in the third quarter after increasing 1.2% in the second quarter. Personal saving as a percentage of DPI was 4.7% in the third quarter, following 4.6% in the second quarter.

Prices: Prices of goods and services purchased by US residents — gross domestic purchases prices — increased 1.3% in the third quarter after increasing 1.5% in the second quarter. Prices of energy goods and services turned down in the third quarter, while food prices turned up. Excluding food and energy, gross domestic purchases prices increased 1.3% in the third quarter after increasing 1.2% in the second quarter. 

US GDP third quarter