GDP growth stronger than expected
Dec. 23, 2013 – Improved third quarter estimates from the Bureau of Economic Analysis for personal consumption expenditures (PCE) and GDP growth may have influenced the Federal Reserve’s decision to begin tapering asset purchases in January, according to NAFCU Chief Economist David Carrier.
In a Macro Data Flash, Carrier reported that GDP growth was stronger than expected at 4.1 percent, due to a significant upward revision to PCE in the third quarter. Overall PCE inflation in the third quarter was 1.9 percent, which is close to the Fed’s target of 2 percent. However, core PCE inflation was still lagging at 1.4 percent.
“The ongoing drag from declining government expenditures appears to have ended in the second and third quarters, which helped boost overall GDP,” Carrier continued. “The impact of the October government shutdown will be captured in fourth quarter data.”
Real GDP growth came from a number of sources, including gains in private inventories (1.7 percent), personal consumption expenditures (1.4), nonresidential investment (0.6), and residential investment (0.3), among others.
NAFCU Macro Data Flash