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Ed Dolan’s Econ Blog US Records Healthy 4.1 Percent GDP Growth in Q3 Posted December 21, 2013 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 Rises to
4.1 Percent Rate in Q3 2013  The third estimate from the Bureau of Economic Analysis showed US GDP growing at a 4.1 percent annual rate in the third quarter of 2013  That marked another upward revision from the 2.8 percent advance estimate and the 3.6 percent second estimate  Growth in Q3 2013 was the strongest since the first quarter of 2012 and well above the average for the recovery December 21, 2013 Ed Dolan’s Econ Blog

Phases of the Business Cycle
 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 latest data show that the expansion is continuing. Real GDP is now 5.6 percent above the previous peak December 21, 2013 Ed Dolan’s Econ Blog

Sources of Growth by Sector
 Most of the upward revision came from stronger consumption, which contributed 1.36 percentage points to Q3 growth, up from .96 points previously reported  Investment contributed 2.56 percentage points. Fixed investment was a bit stronger and inventory investment weaker than earlier reported  Exports grew a bit faster than imports, so the contribution of net exports was positive  The government sector made a small positive contribution to growth, due to more spending at the state and local level. Federal spending decreased. Contribution by sector to the 4.1% GDP growth in Q2 2013 Note: Imports are recorded in the national accounts with a negative sign, so the -0.39 percentage points shown here represent an increase in imports December 21, 2013 Ed Dolan’s Econ Blog

Export Growth Resumes after a
Pause  Exports played a leading role in GDP growth during the early part of the recovery  Beginning in Q2 2012, the growth of exports slowed  The data for Q2 and Q3 show renewed strength in the export sector, despite many remaining weaknesses in the global economy December 21, 2013 Ed Dolan’s Econ Blog

State and Local Spending Shows
Signs of Life  Decreasing government spending, has been a negative influence on GDP growth for most of the past 3 years  In Q3, state and local government spending showed the first convincing growth for four years  Federal spending continued to decrease as fiscal policy debates in Washington remain deadlocked December 21, 2013 Ed Dolan’s Econ Blog

NGDP Growth Accelerates, Gap Starts
to Close  Nominal GDP growth also accelerated in Q3, reaching 6.2 percent, its second best rate of the recovery and the best in two years  For the first time since the Great Recession began, the gap between actual and potential NGDP closed to less than -2 percent December 21, 2013 Ed Dolan’s Econ Blog

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