Data for the Classroom from
Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ US GDP: Q3 Growth Stronger, Economy Finally Enters Expansion Posted Oct 27, 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.

US GDP Growth Q3 2011
<ul><li>US real GDP grew at an estimated 2.5% annual rate in Q3 2011 </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><ul><li>The growth rate of 2.5% was slightly higher than analysts’ expectations. It is approximately equal to the rate needed to keep unemployment from rising, when increases in the labor force and productivity are taken into account </li></ul>Posted Oct. 27, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com

Economy Enters Expansion Phase <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>Q3 GDP was just above its pre-recession peak, according to the advance estimate. After a recovery of 2 years duration, the expansion phase has now begun. </li></ul>Posted Oct. 27, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com

Sources of US GDP Growth
in Q3 2011 <ul><li>Consumption accounted for 2/3 of the growth in Q3 2011, up strongly from Q2 </li></ul><ul><li>Investment accounted for 0.52 percentage points of growth, with strong business fixed investment helping to make up for weak residential investment </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 were up, but not by as much, so net export growth was positive </li></ul>Posted Oct. 27, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com Table shows the contribution of each sector to the 2.46% total GDP growth in Q3, 2011

Nominal GDP Growth Accelerates, Gap
Begins to Close <ul><li>The growth of nominal GDP (NGDP) accelerated from a 4% annual pace in Q2 to 5% in Q3. </li></ul><ul><li>NGDP growth consisted of 2.5% 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 2.5% slightly narrowed the wide gap between actual and potential GDP that opened during the recession </li></ul>Posted Oct. 27, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com