Macro Flash Report

Gross Domestic Product (GDP)

Takeaway:

While Q3 2024 GDP came in slightly below expectations due to weaker net exports and a dip in inventories, strong consumer spending and robust government expenditures signal a resilient economy with continued growth potential.

GDP in Q3 2024 shows that the US economy grew at an annualized rate of 2.8%, slightly below the 3% expansion seen in Q2 and the forecasts of 2.9%. Although missing market expectations, this is still a strong reading and was propelled by strong consumer spending, which has consistently defied expectations for a slowdown.

Key Components:

• Personal spending accelerated to 3.7%, its fastest pace since Q1 2023, driven by a 6% surge in goods consumption (up from 3% in Q2) and steady spending on services (2.6% vs 2.7%).
• Government spending also rose significantly, increasing by 5% (up from 3.1%) primarily due to defense expenditures.
• Net trade’s drag on growth lessened, with a smaller negative contribution of -0.56 percentage points compared to -0.9 in Q2, as exports and imports both surged – up 8.9% and 11.2%, respectively – mainly in capital goods excluding autos.
• Conversely, private inventories subtracted 0.17 percentage points from growth after contributing 1.05 in Q2, and fixed investment slowed to 1.3% (down from 2.3%), primarily due to declines in structures (-4%) and residential investment (-5.1%), while investment in equipment rose sharply (11.1% vs 9.8%).