Summary
The Bureau of Economic Analysis (BEA) will update its forecast for GDP this morning. Last month, in its initial estimate, the BEA indicated that 3Q GDP grew at an annualized 2.8% pace. We expect that to hold — though we note that from 1996 through 2022, the average revision from the advance estimate to the second estimate was plus or minus 0.5%. Key drivers behind the 3Q GDP increase included consumer spending (personal consumption expenditures), which grew at an impressive 3.7% annualized growth rate and contributed 2.46 percentage points to overall GDP expansion. Consumption of goods rose 6.0% and added 1.25 percentage points to growth. The durable goods component rebounded from a decline in 1Q, jumping 8.1% in 3Q. The big services category was solid, rising 2.6%, helped by healthcare, and contributing 1.21 points to GDP growth. Investment in equipment rose 11.1%, with contributions from transportation equipment and information processing equipment. National defense was up 14.9%, a much bigger increase than we anticipated. Residential investment was an anticipated drag on 3Q growth, declining 5.1%. With mortgage rates elevated, the category could also detract from 4Q growth. Net exports subtracted 56 basis points from GDP growth. Exports were strong, but imports (which detract from growth) were even stronger. Companies may have made purchases in anticipation of tariffs. The Atlanta Fed’s GDPNow report is calling for 4Q24 growth of 2.6% based on the November 1
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