The Economy

U.S. GDP Growth Slows to 1.5%

The third-quarter numbers from the Commerce Department show a reduction in business inventories but a robust increase in consumer spending.
Katie Kuehner-HebertOctober 29, 2015
U.S. GDP Growth Slows to 1.5%

U.S. gross domestic product growth slowed in the third quarter, as many companies did not restock their inventories — and concern over continued weakness in the economy mounted.

The GDP grew at a 1.5% seasonally and inflation-adjusted annual rate in the third quarter, well below the 3.9% growth rate in the second quarter, the Commerce Department said Thursday. The 1.5% matched the expectations of economists surveyed by The Wall Street Journal.

The slowing economy was mainly due to dwindling inventory levels, which subtracted 1.44 percentage points from the overall advance — even though consumer spending rose at a 3.2% rate.

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The latest swing could be a correction from overproduction in the first half of the year, but then again it could show soft factory output, according to the WSJ. The overall GDP figure could be a sign that the economic expansion is losing steam.

“While the stronger dollar and the slowdown in China didn’t cause trade to drag on U.S. output last quarter, there is little expectation that the global economy will support domestic growth heading into next year,” the WSJ wrote.

Spending on home building and improvements rose by 6.1%, a slowdown from the roughly 10% growth rate recorded over the prior three quarters, Commerce said. Business investment rose 2.1%, versus 4.1% in the second quarter. Business spending on construction declined, but investments in equipment increased at a faster pace than in the spring. The pace of spending on intellectual property slowed.

Exports increased at a 1.9% rate during the quarter, offset by imports increasing 1.8%.