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Latest Revisions Show Faster Growth of US Real and Nominal GDP


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The third estimate of US GDP showed real GDP growing at a respectable 3.1 annual rate. Nominal GDP grew at 5.9 percent, its fastest since the end of the recession.

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Latest Revisions Show Faster Growth of US Real and Nominal GDP

  1. Data for the Classroom from Ed Dolan’s Econ Blog Latest Revisions ShowStronger Growth of Both Real and Nominal GDP Posted Dec. 29, 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.
  2. Q3 Real GDP Revised Upward to 3.1 Percent The third estimate of US real GDP growth for Q3 2012 showed real output increasing at an annual rate of 3.1%, more than double the 1.3 percent of Q2. Q3 growth had previously been reported at 2.0 percent in October’s advance estimate, which was then revised upward to 2.7 percent in November’s second estimate. Posted Dec. 29, 2012 on Ed Dolan’s Econ Blog
  3. 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 about 2.4 percent above its pre-recession peak Posted Dec. 29, 2012 on Ed Dolan’s Econ Blog
  4. Sources of US GDP Growth in Q3 2012 Consumption contributed 1.12 percentage Table shows the contribution points to Q3 growth of each sector to the 3.1% total GDP growth in Q3 2012 Investment contributed just .12 percentage points to growth. Fixed investment was weak and almost fully offset by a drought- driven decrease in farm inventories Much of the upward revision came from net exports, which contributed .38 percentage points. The advance estimate had shown a small decrease. Government spending reversed a string of decreases, fueled largely by a jump in defense spending, although that will Note: Imports are recorded in the national accounts with a negative sign, so the positive probably not be sustained 0.11 percent shown here represents a decrease in imports Posted Dec. 29, 2012 on Ed Dolan’s Econ Blog
  5. Nominal GDP Growth Accelerates An increasing number of economists focus on Nominal GDP (NGDP) growth as a key policy target During the recession, NGDP fell far below its potential level, opening up a wide NGDP gap (actual minus potential) According to revised data, NGDP grew at a respectable 5.9 percent in Q3 2012, the strongest since the recovery began The Congressional Budget office estimates that potential NGDP is now growing at about 3.5 percent, below its long-run trend of about 4.5 percent Posted Dec. 29, 2012 on Ed Dolan’s Econ Blog
  6. The NGDP Gap Appears to be Closing From the end of the recession in mid- 2009 to Q4 2010, the NGDP gap closed significantly Progress toward closing the gap then stalled. In Q2 2012 the gap was almost the same as in Q4 2010 Now the gap may be starting to close again, although it will take more quarters of data to be sure this is not just a statistical blip Posted Dec. 29, 2012 on Ed Dolan’s Econ Blog