GDP, Inflation Slower in Third Quarter

Real gross domestic product (GDP) slowed during the third quarter of 2006 and inflation abated, according to preliminary estimates by the U.S. Bureau of Economic Analysis. Real GDP increased 2.2 percent compared to 2.6 percent
growth in second quarter.
BEA said the slowdown was due primary to increased imports, decreased residential investment, and decelerations in inventory investment, consumer spending for services, and state and local spending. Those changes were partly offset by upturns in investments in equipment and software, consumer spending for durable goods, and federal government spending.
Prices of goods and services purchased by U.S. residents rose 2.1 percent in third quarter, following a 4 percent increase in second quarter. Energy prices decelerated during the period, while food prices accelerated. Real disposable personal income increased 3.7 percent, compared to a 1.5 percent decrease in the previous quarter.
Increased sales of motor vehicles –especially light trucks – and parts led an upturn in durable goods purchases.
Consumer spending decelerated for services and nondurable goods. Nonresidential fixed investment accelerated, led by upturns in transportation equipment, information processing equipment and software. Residential investment decreased 18 percent following an 11 percent decline in second quarter.
Inventory investment slowed due to downturns in motor vehicle and parts inventories by dealers as well as decreased investments by the mining, utilities and construction industries. Export growth was unchanged. Import growth came from upturns in petroleum, industrial supplies and non-automotive consumer goods.