Table 4 Contributions to Percent Change in Real Gross Domestic Product (Seasonally Adjusted at Annual Rates) Line Percent Change at an Annual Rate 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 2022 Q3 1 Gross Domestic Product Percentage Points at Annual Rates 7.0 2.7 7.0 -1.6 -0.6 2.6 2 Personal Consumption Expenditures 7.84 1.98 2.14 0.91 1.38 0.97 3 Goods 2.65 -1.96 0.55 -0.02 -0.61 -0.28 4 Durable Goods 0.92 -2.22 0.44 0.64 -0.24 -0.07 5 Nondurable Goods 1.74 0.26 0.12 -0.66 -0.37 -0.20 6 Services 5.19 3.94 1.58 0.93 1.99 1.24 7 Gross Private Domestic Investments 0.30 1.78 5.14 0.98 -2.83 -1.59 8 Fixed Investment 1.05 -0.18 0.12 0.83 -0.92 -0.89 9 Nonresidential 1.29 0.10 0.17 0.98 0.01 0.49 10 Structures -0.08 -0.18 -0.35 -0.11 -0.34 -0.41 11 Equipment 0.73 -0.09 0.10 0.55 -0.11 0.54 12 Intellectual Property Products 0.64 0.38 0.42 0.54 0.46 0.36 13 Residential -0.24 -0.29 -0.05 -0.15 -0.93 -1.37 14 Change in Private Inventories -0.75 1.96 5.01 0.15 -1.91 -0.70 15 Net Exports of Goods and Services -0.60 -1.08 -0.16 -3.13 1.16 2.77 16 Exports 0.51 -0.13 2.37 -0.53 1.51 1.63 17 Goods 0.26 -0.28 1.62 -0.58 1.18 1.34 18 Services 0.25 0.15 0.74 0.06 0.33 0.29 19 Imports -1.11 -0.95 -2.53 -2.60 -0.35 1.14 20 Goods -0.49 -0.05 -2.20 -2.38 0.05 1.20 21 Services -0.61 -0.90 -0.33 -0.22 -0.41 -0.06 22 Government Consumption Expenditures and Gross Investments -0.54 -0.02 -0.16 -0.40 -0.29 0.42 23 Federal -0.50 -0.51 0.01 -0.36 -0.22 0.23 24 National Defense -0.10 -0.12 -0.20 -0.33 0.05 0.17 25 Nondefense -0.40 -0.39 0.21 -0.03 -0.28 0.06 26 State and Local -0.04 0.49 -0.17 -0.04 -0.06 0.19 Bureau of Economic Analysis Description: • The above table decomposes percent changes in Real GDP into its components (consumption, investment, government, and net exports) and more specific subcomponents. Analysis: • Table 1 showed that Real GDP increased by 1.8% from Q3 2021 to Q3 2022. Here we are looking at quarterly percentage changes on an annualized basis, breaking down the numbers to reveal how components and subcomponents of Real GDP contribute to these percentage changes. • While the National Bureau of Economic Analysis (NBER) is the final arbiter of recessions, a common rule of thumb is that two consecutive quarters of negative real GDP growth indicate an economy in recession. While the economy experienced negative real GDP growth in the first two quarters of 2022, the robust increases in employment during this time suggest the economy was not in recession. The numbers, however, do indicate a slowing economy. • Despite the 2.6% increase in real GDP in third quarter, a look at the components and subcomponents that make up Real GDP do signify an economic slowdown. • The positive real GDP number was mainly the result of a 2.77% quarterly increase in Net Exports (Exports minus Imports) that largely reflected increases in exports of fuel to Europe because of the Ukraine conflict. • Rising interest rates have resulted in a 1.59% decline in gross private domestic investment with a 1.37% decrease in residential investment dominating. While consumption grew modestly at 0.97%, increased spending on services more than offset declines in spending on goods.
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Center for Business and Economic Insight
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