US Q3 GDP: Good News in the Headlines but Bad News in the Details
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US Q3 GDP: Good News in the Headlines but Bad News in the Details

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US real GDP rose by 2 percent in Q3 2012, up from 1.2 percent in Q2, but exports decreased for the first time since the recession ended

US real GDP rose by 2 percent in Q3 2012, up from 1.2 percent in Q2, but exports decreased for the first time since the recession ended

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    US Q3 GDP: Good News in the Headlines but Bad News in the Details US Q3 GDP: Good News in the Headlines but Bad News in the Details Presentation Transcript

    • Data for the Classroom from Ed Dolan’s Econ Bloghttp://dolanecon.blogspot.com/Q3 GDP: Good News in theHeadline but Bad News in the Details Posted Oct 28, 2012 Terms of Use: These slides are made available under Creative Commons License Attribution—Share Alike 3.0 . You are free to use these slides as a resource for your economics classes together with whatever textbook you are using. If you like the slides, you may also want to take a look at my textbook, Introduction to Economics, from BVT Publishers.
    • Q3 Real GDP Growth at 2.0 Percent The advance estimate of US real GDP growth for Q3 2012 showed real output increasing at an annual rate of 2.0% That was a small improvement over the 1.3 percent reported earlier for Q2 and the same as the growth rate for Q1 2012 Posted Oct. 28, 2012 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com
    • Expansion Continues Q3 2012 was the 13th consecutive quarter of GDP growth According to standard business cycle terminology, the recession phase of the business cycle is the downward movement of GDP from its previous peak The recovery phase is the upward movement from the trough (low point) of the recession and continues until GDP again reaches its previous peak. Once GDP moves above its previous peak, the expansion phase begins. Q3 2012 GDP was well above pre- recession peak, continuing the expansion that the economy entered in Q3 2011 Posted Oct. 28, 2012 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com
    • Sources of US GDP Growth in Q3 2012 Consumption contributed 1.42 percentage points to Q3 growth Table shows the contribution of each sector to the 2.0% total Investment contributed just .07 percentage GDP growth in Q3 2012 points to growth. Fixed investment was weak and almost fully offset by a drought- driven decrease in farm inventories Exports fell for the first time since 2009. Imports, which enter the accounts with the sign reversed, also decrease. Net exports subtracted 0.18 percentage points from GDP growth. Government spending reversed a string of decreases, fueled largely by a jump in defense spending Posted Oct. 28, 2012 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com
    • Exports Decrease in Q3 Exports decreased in Q3 2012 for the first time since the end of the recession Falling exports reflected weakness of all of the main U.S. trading partners The decrease in exports occurred despite a 3-percent depreciation of the real effective exchange rate of the dollar from June to September Posted Oct. 28, 2012 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com
    • Government Contribution to GDP Growth Increases Government consumption expenditures and gross investment made a positive contribution to GDP growth for the first time since Q1 2010 This measure of government spending includes all levels of government but excludes transfer payments like social security and unemployment benefits Almost all the increase was in national defense consumption spending. State and local government added just 0.01 percentage points to growth Posted Oct. 28, 2012 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com
    • Growth of NGDP is Back on Track Nominal GDP (NGDP) grew at a 5 percent annual rate in Q3, up from 2.8 percent in Q2 An increasing number of economists focus on NGDP growth as a key policy target Long term NGDP growth of 4.5 percent (2 percent inflation and 2.5 percent real growth) would represent typical performance for the US economy The Fed does not treat NGDP growth as an official policy target but lagging NGDP growth has been one of several factors that have led the Fed to keep monetary policy on an expansionary path Posted Oct. 28, 2012 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com