Businesses accumulated inventories at a $35.8 billion pace in the third quarter in anticipation of strong demand. As a result, inventory investment contributed 0.73 percentage point to third-quarter GDP growth, after adding just over a tenth of a percentage point to growth in the prior period.
Exports increased at a 2.3 percent rate in the third quarter, while imports fell at a 0.8 percent pace. That left a smaller trade deficit, leading to trade adding 0.41 percentage point to GDP growth. Trade has contributed to output for three quarters in a row.
Hurricanes Harvey and Irma, which hurt incomes and undercut retail sales in August, crimped consumer spending in the third quarter. Growth in consumer spending, which accounts for more than two-thirds of the U.S. economy, slowed to a 2.4 percent rate following a robust 3.3 percent pace in the second quarter.
The storms also weighed on investment in nonresidential structures like oil and gas wells. Spending on mining exploration, wells and shafts grew at a 21.7 percent rate, decelerating from the second-quarter’s 116.3 percent pace.
As result, spending on residential structures fell at a 5.2 percent pace in the third quarter after rising at a 7.0 percent rate in the second quarter.
Investment in home building, which was already undermined by land and labor shortages, also took a hit from Harvey and Irma. Spending on residential construction declined at a 6.0 percent rate, contracting for a second straight quarter.
Business investment on equipment rose at an 8.6 percent rate, increasing for a fourth straight quarter. Government investment fell for a third straight quarter.
