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Ed Dolan’s Econ Blog Pace of US Recovery Slows Sharply in Q4 2012 Posted Jan 30, 2012 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.

Q4 GDP Growth Slows Sharply
The second estimate of US real GDP for Q4 2012 showed growth at an annual rate of just 0.1 percent Previously, January’s advance estimate had shown a GDP falling at a 0.1 percent rate for the quarter A third estimate will be available at the end of March February 28, 2013 Ed Dolan’s Econ Blog

Expansion Interrupted 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. The expansion continued in Q4 2012 but at the slowest rate since Q1 2011 February 28, 2013 Ed Dolan’s Econ Blog

Sources of Growth by Sector
Consumption contributed 1.47 percentage Contribution by sector to the points to Q4 growth, just slightly below its 0.1% GDP growth in Q4 2012 recent average Investment contributed -0.2 percentage points. Fixed investment was strong but more than offset by falling inventories Exports contributed -0.55 percentage points, the first quarterly decrease in exports since Q1 2009. Net exports made a positive contribution because imports fell faster than exports The government sector also made a negative contribution to growth; details on Note: Imports are recorded in the national accounts with a negative sign, so the positive the next side 0.79 percent shown here represents a decrease in imports February 28, 2013 Ed Dolan’s Econ Blog

Fiscal Drag Intensifies The government
contribution to GDP growth has been negative throughout most of the recovery Government spending growth turned positive in Q3 2012, but negative growth returned in Q4 both at the federal and at the state and local levels Economists refer to the negative impact on GDP of falling government spending as fiscal drag. Political gridlock over spending and taxes is expected to increase fiscal drag in 2013 February 28, 2013 Ed Dolan’s Econ Blog

 For further discussion of
the GDP data, read this post Check out these posts for more slideshows and analysis of US macroeconomic data: January 2012 inflation data January 2012 employment situation February 28, 2013 Ed Dolan’s Econ Blog

 For further discussion of
the GDP data, read this post Check out these posts for more slideshows and analysis of US macroeconomic data: January 2012 inflation data January 2012 employment situation February 28, 2013 Ed Dolan’s Econ Blog