WASHINGTON (12/6/13)--Third quarter Gross Domestic Product (GDP) growth was revised upwards Thursday by the U.S. Commerce Department to a seasonally adjusted annualized rate of 3.6%.
The estimated advance reading, 2.8%, was changed after the department's Bureau of Economic Analysis received a more complete dataset. The new numbers revealed strong growth in inventory investment that contributed 1.7% to overall growth, making up the entire revision.
Overall economic growth last quarter was also boosted by a deceleration of imports, and a faster pace of state and local public spending.
Third-quarter inflation rose by 2%. Core inflation--subtracting fuel and food--increased by 1.5%.
The sharp rise in inventory growth, however, casts a shadow over the fourth quarter, according to Moody's (Economy.com Dec. 5). Bolstering anxiety is the fact that real final sales of domestic product--GPD growth which doesn't account for inventory investment--fell to. 1.6% from 1.7% on an annual basis, the weakest reading in three years. The measure's growth contracted to 1.9%, from 2.1% on a quarterly basis.
Gross domestic income growth also fell to 1.4%, a year-low, and corporate profits grew by just 1.8%--down from 3.3% in the second quarter.
The effect of October's partial government shutdown will also be felt in the fourth quarter. It is expected to shave a half percentage point off GDP growth.
Another round of budget and debt-ceiling negotiations coming in the new year could shock consumer confidence and bring a new round of austerity measures, which were at their most intense this year since the end of World War II (Economy.com Dec. 5).
Moody's analysts did say that expectations for increased consumer spending and residential investment should see GDP growth accelerate gradually next year, despite the current inventory glut.