Real gross domestic product increased at an annual rate of 3.5% in the Q3 of 2016, according to the ‘third’ estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.4%.
The GDP estimate released on the 22nd of December is based on more complete source data than were available for the ‘second’ estimate issued in the previous month. In the second estimate, the increase in real GDP was 3.2%.
With this third estimate for the Q3, nonresidential fixed investment, personal consumption expenditures (PCE), and state and local government spending increased more than previously estimated, but the general picture of economic growth remains the same.
Real gross domestic income (GDI) increased 4.8% in the Q3, compared with an increase of 0.7% in the second. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 4.1% in the Q3, compared with an increase of 1.1% in the second.
The increase in real GDP in the Q3 primarily reflected positive contributions from PCE, exports, private inventory investment, nonresidential fixed investment, and federal government spending that were partly offset by negative contributions from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the Q3 primarily reflected an upturn in private inventory investment, an acceleration in exports, a smaller decrease in state and local government spending, an upturn in federal government spending, and a smaller decrease in residential investment, that were partly offset by a smaller increase in PCE and an acceleration in imports.
Current-dollar GDP increased 5.0%, or $225.2bn, in the Q3 to a level of $18,675.3bn. In the second quarter, current dollar GDP increased 3.7%, or $168.5bn.
The price index for gross domestic purchases increased 1.5% in the Q3, compared with an increase of 2.1% in the second quarter. The PCE price index increased 1.5%, compared with an increase of 2.0%. Excluding food and energy prices, the PCE price index increased 1.7%, compared with an increase of 1.8%.
Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) increased $117.8bn in the Q3, in contrast to a decrease of $12.5bn in the second quarter.
Profits of domestic financial corporations increased $50.1bn in the Q3, compared with an increase of $5.6bn in the second. Profits of domestic nonfinancial corporations increased $66.4bn, in contrast to a decrease of $56.1 bn. The rest-of-the-world component of profits increased $1.3bn, compared with an increase of $38.0 bn. This measure is calculated as the difference between receipts from the rest of the world and payments to the rest of the world. In the Q3, receipts decreased $1.3bn, and payments decreased $2.6bn.