Nov 29, 2023 - Economy

U.S. economy was hotter than previously thought, new GDP data shows

President Biden at a "Bidenomics" event in Largo, Maryland, in September. Photo: Al Drago/Bloomberg via Getty Images

Fresh data released Wednesday shows U.S. economic growth in the third quarter was even better than previously thought: Gross domestic product increased at a 5.2% annualized rate, the Commerce Department said.

Why it matters: The data, from the July to September period, is the latest indicator pointing to a booming economy that continues to defy gloomy warnings of a slowdown.

By the numbers: The revision is a slight upgrade from the 4.9% annualized growth initially estimated. The data will be revised again in December.

  • The Q3 figure shows the economy recorded the fastest growth in nearly two years. In the prior quarter, GDP increased 2.1%.

Between the lines: The update to the Q3 data reflects stronger spending on the part of corporations for structures, equipment and intellectual property.

  • It also shows upgrades to state and local government spending. Imports, which act as a drag on the GDP figure, were also revised lower.
  • That was offset by a downward revision to consumer spending — which still increased at a rapid 3.6% annualized rate.

The intrigue: The release also includes the first estimate of an alternate measure of economic growth: gross domestic income (GDI), which sums up all income across the economy.

  • By that measure, growth increased rapidly compared to the second quarter. In Q3, GDI increased 1.5%, a full percentage point above the prior quarter's reading.

The bottom line: Economic growth is expected to slow from Q3's torrid pace. Still, the data shows that the U.S. economy remained solid.

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