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Ed Dolan’s Econ Blog As Exports Soar, US Economy Closes In on Fed’s Targets Posted September 26, 2014 Terms of Use: These slides are provided 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 Publishing.

September 26, 2014 Ed Dolan’s
Econ Blog US GDP Growth in Q2 2014 Strongest in Four Years  The third estimate from the Bureau of Economic Analysis released on September 26 showed that US real GDP grew at an annual rate of 4.6 percent in Q2 2014  That is even faster than the 4.2 percent previously reported, and is the best performance in four years

Phases of the Business Cycle
 According to standard terminology, the recession phase of the business cycle is the downward movement of GDP from its previous peak  It is common to refer to the first phase of growth following the trough (low point) of the recession as a recovery. During that phase, idle equipment goes back on line and workers return to their jobs.  Official reports call the entire growth phase of the cycle an expansion, but many writers apply that term only after GDP has reached its previous peak.  The latest data show that the expansion resumed in Q2 2014 after a winter downturn September 26, 2014 Ed Dolan’s Econ Blog

Sources of Growth by Sector
 The renewed growth of GDP in Q2 2014 was broadly based  Consumption grew at a slightly faster than average pace  Investment enjoyed one of its strongest quarters in years  An increase in expenditures of state and local government more than offset a slight decrease in Federal expenditures  Exports, which have been a strong point of the recovery, grew even more rapidly than previously reported Contribution by sector to the 4.6% GDP growth in Q2 2014 Note: Imports are recorded in the national accounts with a negative sign, so the -.1.77 percentage points shown here represent an increase in imports September 26, 2014 Ed Dolan’s Econ Blog

Exports Show Best Growth in
Four Years  Exports have been a strong point in the US economy throughout most of the recovery  Exports dropped sharply in the winter, due in part to unusually bad weather  They recovered in Q2, showing their strongest growth in two years, all the more remarkable in view of the weak economies of several US trading partners September 26, 2014 Ed Dolan’s Econ Blog

US Economy Closes in on
Fed’s Targets  The price index for personal consumption expenditures grew at a 2.3 percent annual pace in Q2  The Fed defines its policy targets as 2 percent inflation measured by the PCE deflator and 5.25 to 5.75 percent unemployment  Both of those indicators fell within of plus or minus one percentage point of the targets as of midyear September 26, 2014 Ed Dolan’s Econ Blog

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