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Data for the Classroom from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ US GDP: Downward Revision of Q3 Growth Str...
US GDP Growth Q3 2011  <ul><li>US real GDP grew at an estimated 2.0% annual rate in Q3 2011, according to the second estim...
Even with Downward Revision, Economy Still in Expansion <ul><li>According to standard business cycle terminology, the  rec...
Sources of US GDP Growth in Q3 2011  <ul><li>Consumption accounted for much of the growth in Q3 2011, up strongly from Q2 ...
Nominal GDP Growth Equals Trend, Gap Remains Large <ul><li>The revised growth of nominal GDP (NGDP) accelerated from a 4% ...
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Downward Revision to US GDP Stregthens Case for New Stimulus

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Downward revision to US GDP growth for Q3 2011 strengthens the case for new stimulus to the weak economic expansion.

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Downward Revision to US GDP Stregthens Case for New Stimulus

  1. Data for the Classroom from Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ US GDP: Downward Revision of Q3 Growth Strengthens Case for New Stimulus Posted Nov 24, 2011 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.
  2. US GDP Growth Q3 2011 <ul><li>US real GDP grew at an estimated 2.0% annual rate in Q3 2011, according to the second estimate released by the Bureau of Economic Analysis </li></ul><ul><li>That was a downward revision from the 2.5% preliminary estimate reported in October </li></ul><ul><li>The July-September 2011 quarter was the 9 th consecutive quarter of growth since the end of the recession that lasted from Dec 2007 to Jun 2009 </li></ul>Posted Nov. 24, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com
  3. Even with Downward Revision, Economy Still in Expansion <ul><li>According to standard business cycle terminology, the recession phase of the business cycle is the downward movement of GDP from its previous peak </li></ul><ul><li>The recovery phase is the upward movement from the trough (low point) of the recession and continues until GDP again reaches its previous peak. </li></ul><ul><li>Once GDP moves above its previous peak, the expansion phase begins. </li></ul><ul><li>Although revised downward, Q3 GDP was still just a bit above its pre-recession peak. After a recovery of 2 years duration, the expansion phase has now begun. </li></ul>Posted Nov. 24, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com
  4. Sources of US GDP Growth in Q3 2011 <ul><li>Consumption accounted for much of the growth in Q3 2011, up strongly from Q2 </li></ul><ul><li>Investment was revised strongly downward from the preliminary estimate. Fixed investment remained strong but was more than offset by a large drop in inventories </li></ul><ul><li>Federal government defense spending grew but was offset by continued decline of federal nondefense spending and state and local government spending </li></ul><ul><li>Exports continued to contribute strongly to growth. Imports (a negative entry in the GDP accounts) also increased, but by less than reported in the preliminary estimate </li></ul>Posted Nov. 24, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com Table shows the contribution of each sector to the 2% total GDP growth in Q3, 2011
  5. Nominal GDP Growth Equals Trend, Gap Remains Large <ul><li>The revised growth of nominal GDP (NGDP) accelerated from a 4% annual pace in Q2 to 4.5% in Q3. </li></ul><ul><li>NGDP growth consisted of 2.0% real growth and 2.5% inflation </li></ul><ul><li>An increasing number of economists focus on NGDP growth as a key policy target. Over the long run, NGDP growth of about 4.5% would allow real GDP to track its potential level with about 2% inflation. </li></ul><ul><li>The Q3 NGDP growth of 4.5% failed to narrow the wide gap between actual and potential GDP that opened during the recession </li></ul>Posted Nov. 24, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com

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