The U.S. Commerce Department has released its first read on real gross domestic product (GDP) for the third quarter of 2014, showing that GDP rose at an annual rate of 3.5%. Bloomberg was calling for a consensus of 3.0%, and the Dow Jones consensus estimate was 3.1%. The price index rose by 1.3% in the third quarter, which was just shy of the 1.4% consensus estimate from Bloomberg.

Positive contributions were seen in personal consumption expenditures (PCE), exports, federal government spending, state and local government spending and nonresidential fixed investment. These gains were offset by a negative contribution from private inventory investment. The Commerce Department said that imports, a subtraction in the GDP calculation, fell in the third quarter.

Final sales of domestic product rose by 4.2% in the third quarter, after a gain of 3.2% in the second quarter. Final sales to domestic purchasers were up by 2.7% in the third quarter, versus 3.4% in the second quarter.

On the pricing component, the chain-weighted price index showed decelerating growth with its 1.3% in the third quarter, versus 2.1% in the second quarter. Also, core chain index on an ex-food and energy basis rose by 1.6% in the third quarter, versus 1.8% in the second quarter.

An official quote said:

The deceleration in the percent change in real GDP reflected a downturn in private inventory investment and decelerations in PCE, in nonresidential fixed investment, in exports, in state and local government spending, and in residential fixed investment that were partly offset by a downturn in imports and an upturn in federal government spending.

The numbers might have been far worse without Uncle Sam. The Commerce Department said:

Real federal government consumption expenditures and gross investment increased 10.0 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second. National defense increased 16.0 percent, compared with an increase of 0.9 percent. Nondefense increased 0.5 percent, in contrast to a decrease of 3.8 percent. Real state and local government consumption expenditures and gross investment increased 1.3 percent, compared with an increase of 3.4 percent.

In the second quarter, real GDP increased by 4.6%. As with all first projections of GDP, the BEA reminded investors that the third-quarter advance estimate released Thursday is based on source data that are incomplete or subject to further revision. The second estimate for the third-quarter GDP will be released on November 25, 2014.

Equity futures were still down handily on Thursday morning, but they were off the pre-GDP lows. The DJIA futures had been down close to 80 points before the data, and they were down 53 points about 15 minutes after the GDP release.

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