News & Insights

Real GDP grew at an annual rate of 2.8% in the third quarter of 2024, down slightly from 3.0% in the second quarter and below consensus expectations of 3.1% growth. Growth during the quarter was driven by increases in consumer spending, exports and government spending.

Consumer spending grew at an annual rate of 3.7%, with both spending on goods (up 6.0%) and services (up 2.6%) contributing to the gain. Consumer spending on nondurable goods, led by prescription drug spending, rose a strong 4.9%, while spending on durable goods, led by motor vehicles and parts spending, showed more significant growth at 8.1%. Within services, spending on health care and food services and accommodations were the largest contributors to the increase. The increase in exports (up 8.9%) primarily reflected an increase in capital goods exports, excluding automotive, while the increase in federal government spending (up 9.7%) was led by defense spending (up 14.9%).

The drags on growth came from residential fixed investment, which decreased 5.1% in the third quarter, and a downturn in private inventory investment. Nonresidential fixed investment exhibited healthy growth of 3.3%, with a key driver being business spending on equipment, which rose 11.1%. A large portion of this gain was from investment in transportation equipment, which also contributed positively to GDP in the previous quarter.