Final Q3 GDP Estimate Unrevised at 4.9%

The final estimate for third-quarter GDP came in at an unrevised annual rate of 4.9%, the strongest figure in the last four years. Economists were predicting the figure would tick up slightly to 5%. The GDP component that includes housing, residential fixed investment, dropped by 20.5%, a larger drop than the 19.7% figure previously estimated. Consumer spending, the largest component of GDP, increased to 2.8%, accounting for 2.01 percentage points in the GDP. The PCE price gauge, excluding food and energy, climbed to 2.0%, above the previously reported 1.8%. The gauge is the Fed's preferred measure of underlying inflation, and it has an unofficial target zone of 1.0%-2.0%. Real GDP has increased 2.8% in the past year.

Though the economy enjoyed a very healthy increase last quarter, forecasters are now projecting fourth-quarter GDP to decrease to 1.0% or less. The first estimate for fourth-quarter GDP comes out January 30th.

Sources: MarketWatch, Wall Street Journal

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