Real GDP growth rose 2.9% in the third quarter, a little more than double the pace of the second quarter and the fastest pace in two years. Consumer spending remained solid but did not reach expectations. Spending on nondurable goods, including food and clothing, waned a bit over the period. Residential investment contracted for a second straight quarter; single-family home construction was essentially flat, while multifamily starts plummeted. Most of the drop in multifamily starts, however, may be attributed to severe storms in the South and the resulting disruptions to construction activity. Combined with tight supplies in the single-family home market, that suggests residential investment will regain some momentum in the fourth quarter. Anecdotal reports indicate that remodelling and repairs are also on the rise.
Nonresidential investment rose for the second quarter in a row