The United States gross domestic product (GDP) increased 2.8% in the third quarter from 2.5% in the previous quarter. The acceleration of the GDP was driven primarily by improvement in private inventories based on the report of the Bureau of Economic Analysis (BEA) of the Department of Commerce on Thursday.
According to BEA, private inventories contributed 0.83 percent point to the GDP in the third quarter. The bureau estimated that the inventories of private businesses increased $86 billion during the period.
U.S. stock markets declined on Thursday due to speculations that the Federal Reserve might start tapering its bond-buying program as economic data showed that the economy is growing faster than expected. Economists surveyed by Bloomberg projected that the GDP growth will be around 2% for the third quarter.
Last week, the Federal Reserve maintained its $85 billion monthly bond-buying program to support continues economic growth and maximum employment & price stability. Policy makers decided to wait for more economic data to see evidences that the economic growth will be sustained before reducing the quantitative easing.
The Dow Jones Industrial Average (DJIA) fell 0.97% to 15,593.88 points, the S&P 500 declined by 1.32% to 1,746.16 points, and the Nasdaq dropped by 1.90% t0 3,857.33% after the trading session today.
Data from BEA revealed that the price index for gross domestic purchases increased 1.8% in the third quarter from 0.2% in the second quarter.
During the quarter, residential fixed investment went up by 14.6%, non-residential fixed investment and non-residential structures increased 1.6% and 12.3% respectively. Durable goods expanded by 7.8% and non-durable goods improved by 2.7%. Real estate and local government consumption expenditures and gross investment went up 1.5%
Personal consumption expenditures went up by 1.5%, exports of goods and services and intellectual property products increased by 4.5$ and 2.2%, respectively. Equipment declined 3.7%, national defense decreased 0.7% and non-defense dropped 3.3%.
The gross domestic purchases of goods and services remained at 2.5% during the quarter. BEA reported that the current dollar income was $132.7 billion compared with $139.1 billion in the previous quarter. Disposable personal income was $138.1 billion, up from $103.2 billion in the second quarter.
Personal outlays also improved from $42.1 billion to $109 billion and the personal savings rate for the period was 4.7%. The current dollar GDP increased 4.8% or $196.6 billion from 3.1% or $125.7 billion in the second quarter.