Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Q3 GDP estimate rises to 2.7% ó on govít spending
Hotair ^ | 11/29/2012 | Ed Morrissey

Posted on 11/29/2012 10:23:58 AM PST by SeekAndFind

When I wrote about the advance estimate from the Commerce Department on Q3 GDP hitting 2.0%, some commenters warned that the report --- which came out just before the election --- would be sharply revised after it. They were right, although the revision went in the opposite direction they suspected. The revised Q3 GDP number jumped upward to 2.7%, the best quarter of the year, although still substantially a stagnation number, especially when one sees the source of the growth:

Real gross domestic product --- the output of goods and services produced by labor and property located in the United States --- increased at an annual rate of 2.7 percent in the third quarter of 2012 (that is, from the second quarter to the third quarter), according to the "second' estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent (see “Revisions” on page 3).

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, federal government spending, residential fixed investment, and exports that were partly offset by negative contributions from nonresidential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased slightly.

Actually, though, the numbers aren’t quite that good internally. Growth in consumer spending was only 1.4%, although durable goods spending rose 8.7%. Exports of goods and services only went up 1.1%. Real final sales of domestic product — the actual growth in end-user spending, as opposed to inventory growth — went up just 1.9%.

So what did go up? Government spending, emphasis mine:

Real federal government consumption expenditures and gross investment increased 9.5 percent in the third quarter, in contrast to a decrease of 0.2 percent in the second. National defense increased 12.9 percent, in contrast to a decrease of 0.2 percent. Nondefense increased 3.0 percent, in contrast to a decrease of 0.4 percent. Real state and local government consumption expenditures and gross investment decreased 0.4 percent, compared with a decrease of 1.0 percent.

Even Reuters couldn’t muster up much enthusiasm for these numbers:

Gross domestic product expanded at a 2.7 percent annual rate, the Commerce Department said on Thursday, as faster inventory accumulation and export growth offset weak consumer spending and the first drop in business investment in more than a year.

While the growth pace was much quicker than the 2.0 percent rate the government estimated last month and the best since the fourth quarter of 2011, it was hardly a sign of strength in the economy given the boost from restocking and weaker consumer spending.

That will likely be lost in the fourth quarter and inventories may be a drag on growth, which is already being weighed down by fears of austerity, known as the fiscal cliff.

In other economic news, the rate of new jobless claims returned to its 18-month level as the effects of Hurricane Sandy dissipated:

In the week ending November 24, the advance figure for seasonally adjusted initial claims was 393,000, a decrease of 23,000 from the previous week’s revised figure of 416,000. The 4-week moving average was 405,250, an increase of 7,500 from the previous week’s revised average of 397,750.

The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending November 17, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 17 was 3,287,000, a decrease of 70,000 from the preceding week’s revised level of 3,357,000. The 4-week moving average was 3,296,250, an increase of 6,250 from the preceding week’s revised average of 3,290,000.

The data table at the end shows the major decreases in state numbers from the previous reporting week, which is dominated by Sandy states — except for California, whose decrease in new claims goes unexplained. Basically, the two reports indicate that the stagnation status quo continues.


TOPICS: Business/Economy; Culture/Society; Front Page News; Government
KEYWORDS: gdp; government; spending

1 posted on 11/29/2012 10:24:04 AM PST by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

The inflation numbers are reported both with and without ‘food and energy’. Can’t they report GDP ex- gov’t expenditures to make the real state of the economy clearer?

Or that would only happen if Romney won the election?


2 posted on 11/29/2012 10:35:51 AM PST by MichaelCorleone ('We the People' can and will take this country back...starting today.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

government spending should not be part of GDP calculations, because it is a net negative on the economy.


3 posted on 11/29/2012 10:40:19 AM PST by GeronL (http://asspos.blogspot.com)
[ Post Reply | Private Reply | To 1 | View Replies]

To: GeronL

Adding government spending to GDP is like including the withholding taxes as take home pay.


4 posted on 11/29/2012 11:02:39 AM PST by massgopguy (I owe everything to George Bailey)
[ Post Reply | Private Reply | To 3 | View Replies]

To: massgopguy
Adding government spending to GDP is like including the withholding taxes as take home pay.

It's like taking out cash advances on your credit cards and then saying "I had a good week this week"

5 posted on 11/29/2012 11:04:54 AM PST by Cementjungle
[ Post Reply | Private Reply | To 4 | View Replies]

To: massgopguy

bump


6 posted on 11/29/2012 11:08:07 AM PST by GeronL (http://asspos.blogspot.com)
[ Post Reply | Private Reply | To 4 | View Replies]

To: SeekAndFind
GDP is and always has been a faulty way to measure the wealth of a nation. It was first politicized by LBJ when he realized he could manage the GDP number by under reporting the inflation rate, since GDP is net of inflation.

It is also reported out in an irresponsible way. Reporting straight percentages is highly misleading. If GDP rises.7% but the population grew by 2%, then really the economy only grew by.7%. A more honest reporting would be GDP per capita.

Which reminds me once again why the Austrian School rejects measuring economies out of hand. All you need to know is that a free economy will grow, a managed one will stagnate.

7 posted on 11/29/2012 11:31:09 AM PST by Sam Gamgee (May God have mercy upon my enemies, because I won't. - Patton)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Does anyone have the debt/gdp figures for Q3 2012?
As in the debt increased by $2.63 for $1 gdp (Q2 2012?)


8 posted on 11/29/2012 12:32:06 PM PST by griswold3 (Big Government does not tolerate rivals.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: griswold3

Personal consumption expenditures grew at measly rate and the KC Fed Index fell to its lowest level since July 2009.

http://confoundedinterest.wordpress.com/2012/11/29/housing-employment-gdp-and-cnbc-with-rick-santelli/


9 posted on 11/29/2012 1:38:36 PM PST by whitedog57
[ Post Reply | Private Reply | To 8 | View Replies]

To: Sam Gamgee

GDP per capita is more honest than raw GDP given that it takes into account population growth but it is most defiantly still subject to the changes in the value of the dollar(IE inflation).

In other-words the GDP per capita would go up if the value of the dollar went down and the economy when nowhere as fast.

A simple GDP per captia analyzes would produce a chart like this:

http://www.tradingeconomics.com/united-states/gdp-per-capita

Which is technically true in terms of U.S. dollars but a dollar in 1960 is worth $7.49 in 2011.

http://www.westegg.com/inflation/

So a 1960 GDP per captia of around 15k is actually 112k in today’s dollars. Yes we really have lost that much wealth. Just think a man uses to be able to support a family on a signal income where as now it takes two. We work a lot harder for a lot less than our parents & grandparents did. The only mitigating factor is our technology has made effecency so great that we need a lot less.


10 posted on 11/29/2012 2:50:33 PM PST by Monorprise
[ Post Reply | Private Reply | To 7 | View Replies]

To: Monorprise

bump. People really should pay attention to our real GDP per cap in-terms of inflation.

The costs of liberalism have been astronomical. Because of inflation people have no idea how much they have lost.


11 posted on 12/01/2012 12:12:45 PM PST by Monorprise
[ Post Reply | Private Reply | To 10 | View Replies]

To: Monorprise

bump. People really should pay attention to our real GDP per cap in-terms of inflation.

The costs of liberalism have been astronomical. Because of inflation people have no idea how much they have lost.


12 posted on 12/01/2012 12:12:55 PM PST by Monorprise
[ Post Reply | Private Reply | To 10 | View Replies]

To: Monorprise

Well supposedly this: http://www.tradingeconomics.com/united-states/gdp-per-capita
is adjusted by inflation.


13 posted on 12/01/2012 12:17:20 PM PST by Monorprise
[ Post Reply | Private Reply | To 12 | View Replies]

To: Monorprise

Well supposedly this: http://www.tradingeconomics.com/united-states/gdp-per-capita
is adjusted by inflation.


14 posted on 12/01/2012 12:17:34 PM PST by Monorprise
[ Post Reply | Private Reply | To 12 | View Replies]

To: Cementjungle; GeronL; massgopguy

It was bad enough that during the housing boom people thought that an increased appraisal on an existing house represented an increase in real wealth but now it seems everyone is going nuts. Not only is government spending counted as Gross Domestic PRODUCTION when it is only grossly counterproductive waste of resources in most cases but I just got an e-mail from some investment guru describing all the “wealth” that is going to result from aging baby boomers demand for more health care! I also read that John Kenneth Galbraith recommends that people retire early to boost the economy! I’m supposedly retired but working two part time jobs, I guess I should quit both jobs and try to get sick and go in the hospital to do my part in saving America.
My tag line expresses what I think of the current situation.


15 posted on 12/03/2012 5:22:53 AM PST by RipSawyer (I was born on Earth, what planet is this?)
[ Post Reply | Private Reply | To 5 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson