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Ed Dolan’s Econ Blog US GDP Grows at 3.5 Percent in Q3 for Best Six-Month Run of the Recovery Posted October 30, 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.

US GDP Growth Remains Strong
in Q3 2014  The advance estimate from the Bureau of Economic Analysis released on October 30 showed that US real GDP grew at an annual rate of 3.5 percent in Q3 2014  Following an exceptional 4.6 growth rate in Q2, that makes it the best half-year performance for the recovery October 30, 2014 Ed Dolan’s Econ Blog

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.  Real GDP is now 7.7 percent higher than its pre-recession peak October 30, 2014 Ed Dolan’s Econ Blog

Sources of Growth by Sector
 Consumption grew slightly slower than in Q2, but only a little below its average for the recovery  Investment slowed sharply in Q3, mostly because inventory investment turned from positive to negative  An unusual burst of defense spending pushed the federal contribution to GDP growth higher  Exports, which have been a strong point of the recovery, continued to grow strongly while imports decreased Contribution by sector to the 3.5% GDP growth in Q3 2014 Note: Imports are recorded in the national accounts with a negative sign, so the +.29 percentage points shown here represent a decrease in imports October 30, 2014 Ed Dolan’s Econ Blog

Exports Show Another Quarter of
Good Growth  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 and showed continued strong growth in Q3, all the more remarkable in view of the weak economies of several US trading partners October 30, 2014 Ed Dolan’s Econ Blog

US Economy Closes in on
Fed’s Targets  The price index for personal consumption expenditures grew at a 1.2 percent annual pace in Q3  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 Q3 2014 October 30, 2014 Ed Dolan’s Econ Blog

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