US GDP Growth Revised Downward on Falling Exports


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US GDP growth was revised downward to 1.8 percent in Q1, in part because of falling exports

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US GDP Growth Revised Downward on Falling Exports

  1. 1. Economics for your Classroom fromEd Dolan’s Econ BlogUS GDP Growth RevisedDown to 1.8 Percenton Falling ExportsPosted June 26, 2013Terms of Use: These slides are provided under Creative Commons License Attribution—Share Alike 3.0 . You are freeto use these slides as a resource for your economics classes together with whatever textbook you are using. If you likethe slides, you may also want to take a look at my textbook, Introduction to Economics, from BVT Publishing.
  2. 2. June 26, 2013 Ed Dolan’s Econ BlogUS GDP Grows at 1.8 Percent Rate in Q1 2013 The third estimate from the Bureauof Economic Analysis showed USGDP growing at a 1.8 percent annualrate in the first quarter of 2013. That was a decrease of 0.6percentage points from the secondestimate, 2.4 percent, released lastmonth. The average revision from thesecond to third estimates,disregarding sign, is 0.2 percentagepoints
  3. 3. Expansion Resumes According to standard business cycleterminology, the recession phase of thebusiness cycle is the downwardmovement of GDP from its previouspeak The recovery phase is the upwardmovement from the trough (low point)of the recession and continues untilGDP again reaches its previous peak. Once GDP moves above its previouspeak, the expansion phase begins. The expansion resumed in Q1 2013after almost stalling in Q4 2012June 26, 2013 Ed Dolan’s Econ Blog
  4. 4. Sources of Growth by Sector Consumption contributed 1.83 percentagepoints to Q4 growth, including both goodsand services Investment contributed 0.96 percentagepoints. Fixed investment was lower than inQ4 while inventories grew faster Exports contributed decreased for thesecond consecutive quarter, partly offset bya decrease in imports (details on Slide 5) The government sector also made anegative contribution to growth (details onSlide 6)Contribution by sector to the1.8% GDP growth in Q1 2013Note: Imports are recorded in the nationalaccounts with a negative sign, so the +0.6percent shown here represents a decrease inimportsJune 26, 2013 Ed Dolan’s Econ Blog
  5. 5. Export Growth Turns Negative Exports have been a source ofstrength throughout the recovery, butthey are now falling as the globaleconomy slows US exports fell in Q1 for the secondconsecutive quarterJune 26, 2013 Ed Dolan’s Econ Blog
  6. 6. Fiscal Drag Continues The government contribution toGDP growth, as measured bygovernment consumptionexpenditure and gross investment,has been negative throughout mostof the recovery Government spending growthturned positive in Q3 2012, butnegative growth returned in Q4 andcontinued in Q1 2013 Economists refer to the negativeimpact on GDP of lower governmentspending as fiscal drag. Politicalgridlock over spending and taxes isexpected to lead to continued fiscaldrag throughout this yearJune 26, 2013 Ed Dolan’s Econ Blog
  7. 7. Click here to learn more about Ed Dolan’s Econ textsor visit www.bvtpublishing.comFor more slideshows, follow Ed Dolan’s Econ BlogFollow @DolanEcon on Twitter
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