Today, the Bureau of Economic Analysis (BEA) released third and final installment of the Q3 2008 GDP report showing the second contraction in four quarters with GDP declining at an annual rate of -0.5%.Looking at the report more closely though, the top-line GDP result would have been much weaker had it not been for a surprise and truly unusual 18.0% surge in national defense spending that, combined with a healthy increases in other federal, state and local government spending, added over 1% of growth.
Fixed investment and personal consumption, on the other hand, provided significant drags on growth with non-residential investment declining -1.7%, residential investment declining -16.0% and personal consumption expenditures declining -3.8% led by a whopping -14.8% drop-off in durable goods.
The following chart shows real residential and non-residential fixed investment versus overall GDP since Q1 2003 (click for larger version).
