Dec. 20 (UPI) — Americans spent more during the third quarter than originally thought, but the growth was offset by lower inventory numbers, a revised report by the Commerce Department said Friday.
Consumer spending, which accounts for two-thirds of the U.S. economy, rose 3.2 percent between July and October — up from the previously reported 2.9 percent.
However, inventory investment offset the gain and the rate remained a flat 2.1 percent for the period — a slight increase from 2 percent in Q2.
Friday’s report said business investment fell by the largest amount since 2015, supporting the position that consumer spending is the most important element of the domestic economy.
For the quarter, growth stayed ahead of the rate of inflation, which was 2.1 percent — almost exactly on the figure the Federal Reserve judges for a healthy economy. Inflation was at 1.9 percent in Q2.
“The increase in real GDP in the third quarter reflected positive contributions from [personal consumer expenditures], federal government spending, residential investment, exports, and state and local government spending that were partly offset by negative contributions from nonresidential fixed investment and private inventory investment,” the department said.
Personal consumption is expected to slow in the fourth quarter, with an expectation of 1.6 percent overall growth. A decision by Boeing to halt production of its 737 Max aircraft could slightly short expectations for the first quarter of 2020, experts believe.