Data for the Classroom from
Ed Dolan’s Econ Blog http://dolanecon.blogspot.com/ US GDP: Can We Blame the Grinch for Yet Another Downward Revision of Growth? Posted Dec. 23, 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>Blame the Grinch who Stole Christmas? Third estimate US real GDP for Q3 2011 brought yet another downward revision </li></ul><ul><li>GDP now grew at an estimated 1.8% annual rate in Q3 2011, less than the 2.0% second estimate and less still than the 2.5% preliminary estimate reported in October </li></ul><ul><li>Although slowing, 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 Dec. 23, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com

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 little (0.04%) above its pre-recession peak in Q4 2007. After a recovery of 2 years duration, the expansion phase has now begun. </li></ul>Posted Dec. 23, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com

Sources of US GDP Growth
in Q3 2011 <ul><li>Consumption was revised downward, but still accounted for much of the growth in Q3 </li></ul><ul><li>Investment was revised up to weakly positive compared with the negative number in last month’s second estimate </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 grew even more strongly than previously reported, but they were offset by an upward revision of imports (a negative entry in the GDP accounts) </li></ul>Posted Dec. 23, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com Table shows the contribution of each sector to the 1.8% total GDP growth in Q3, 2011

Nominal GDP Growth Equals Trend,
Gap Remains Large <ul><li>The revised growth of nominal GDP (NGDP) was 3.9% in Q3. </li></ul><ul><li>NGDP growth consisted of 1.8% real growth and 2.1% 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 3.9% suggests that the gap between actual and potential GDP that opened during the recession continued to widen </li></ul>Posted Dec. 23, 2011 on Ed Dolan’s Econ Blog http://dolanecon.blogspot.com