US GDP Growth Beats Expectations in Q2, Recovery Stronger than Previously Reported

Economics for your Classroom from Ed Dolan’s Econ Blog US GDP Growth for Q2 13 Beats Expectations, Revisions Show Stronger Recovery Posted July 31, 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.

July 31, 2013 Ed Dolan’s Econ Blog US GDP Grows at 1.7 Percent Rate in Q2 2013  The advance estimate from the Bureau of Economic Analysis showed US GDP growing at a 1.7 percent annual rate in the second quarter of 2013.  That was up from 1.1 percent in Q1 2013 and 0.1 percent in Q4 2012.  The latest BLS report contained major revisions of data for earlier periods. Growth for the previous two quarters had been reported earlier at 0.4 percent for Q4 and 1.8 percent for Q1

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. July 31, 2013 Ed Dolan’s Econ Blog

Recession Shallower, Recovery Stronger than Previously Reported  This chart shows newly revised and previously released data  For comparison, both series are rebased on a scale with the peak of the previous cycle Q4 2007 equal to 100  The chart shows that the recession was not quite so deep as previously reported, and the recovery somewhat stronger  The new data show GDP in Q1 2013 to have been 3.9 percent above the 2007 peak, rather than 3.0 percent as previously reported. In Q2, it increased to 4.4 percent above the previous peak July 31, 2013 Ed Dolan’s Econ Blog

Sources of Growth by Sector  Consumption contributed 1.22 percentage points to Q2 growth, including both goods and services  Investment contributed 1.34 percentage points. Fixed investment was much stronger than in Q1 while inventories grew a little slower  Exports resumed growth after a brief decrease in Q1. Imports increased more than exports, so the contribution of net exports was negative  The government sector also made a negative contribution to growth, but the decrease was smaller than in Q1 Contribution by sector to the 1.7% GDP growth in Q2 2013 Note: Imports are recorded in the national accounts with a negative sign, so the -1.51 percent shown here represents an increase in imports July 31, 2013 Ed Dolan’s Econ Blog

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