According to its initial (“advance”) estimate, real gross domestic product (GDP) increased at an annual rate of 2.8% in the third quarter of 2024, falling short of both the previous quarter and analysts’ expectations, a U.S. Bureau of Economic Analysis (BEA) report released Wednesday reveals.
Economists had expected GDP to grow 3.0% and match the second quarter’s increase.
Health-related expenditures fueled the growth in consumer spending on both goods and services. Within goods, the leading contributors were other nondurable goods (led by prescription drugs) and motor vehicles and parts. Within goods, the leading contributors were other nondurable goods (led by prescription drugs) and motor vehicles and parts.
The BEA attributes the third quarter’s slower rate of growth to a decline in investments:
“Compared to the second quarter, the deceleration in real GDP in the third quarter primarily reflected a downturn in private inventory investment and a larger decrease in residential fixed investment. These movements were partly offset by accelerations in exports, consumer spending, and federal government spending. Imports accelerated.”
Real disposable personal income grew 1.6 percent, less than the second quarter’s increase of 2.4 percent.
Personal saving as a percentage of disposable personal income was 4.8 percent in the third quarter, down from the personal savings rate of 5.2 percent in the second quarter.
Job Creators Network CEO Alfredo Ortiz reacted to today’s BEA report by warning that the economy is deceptively weak, due to the effect of overzealous government spending:
"Look under the hood of the 2.8% GDP increase, and you'll see the economy is far weaker than this number suggests. Domestic economic investment was essentially flat in the third quarter, while government spending surged by nearly 10%, more than twice the previous quarter's increase.
“Unlike the real economy, driven by small businesses, the government does not create value, and government spending comes at the expense of the type of meaningful economic growth that drives living standards.Â
"Meanwhile disposable personal income grew at its slowest rate since 2021, and the personal savings rate fell, demonstrating ordinary consumers are tapped out in the Biden-Harris high-cost economy.”
The business and economic reporting of CNSNews is funded in part with a gift made in memory of Dr. Keith C. Wold.