Business situation: advance estimates for the third quarter of 2004

Economic growth stepped up somewhat in the third quarter of 2004, and inflation moderated, according to the advance estimates of the national income and product accounts (NIPA). Real gross domestic product (GDP) increased 3.7% after increasing 3.3% in the second quarter. The price index for gross domestic purchases increased 1.8% after increasing 3.5%. The insurance transactions associated with the hurricanes that struck portions of the southern and eastern US in August and September did not directly affect third-quarter GDP, reflecting the new treatment of insurance services that BEA introduced as part of its 2003 comprehensive revision of the NIPAs. Estimates of other, indirect effects of the hurricanes are not available because the effects may occur with a lag, and they generally cannot be disentangled from the regular source data that BEA uses to prepare its GDP estimates. However, some income flows were affected by the hurricanes, and estimates of those effects have been prepared. The step-up in GDP growth mainly reflected an acceleration in consumer spending and a slowdown in imports.