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US Gross Domestic Income Growth Outpaces GDP Growth in Q4 2011


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US GDP growth was 3.0 percent in Q4 2011, according to the final estimate, but GDI grew more strongly, at 4.4 percent

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US Gross Domestic Income Growth Outpaces GDP Growth in Q4 2011

  1. Data for the Classroom from Ed Dolan’s Econ Blog US Gross DomesticIncome Growth Outpaces GDP Posted March 31, 2012 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.
  2. Q4 GDP Grows at 3 percent US GDP growth accelerated to 3% in Q4 2011, the fastest rate in a year and a half, according to the final estimate from the BEA. It was the 10th consecutive quarter of growth, good news for the White House as the election season heats up The final estimate was unchanged from the second estimate, released in February. It is not really “final;” it may be subject to further revision in the future Posted Mar. 31, 2012 on Ed Dolan’s Econ Blog
  3. Economy Moves Solidly Into Expansion 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. Q3 GDP was only slightly (0.04%) above its pre-recession peak. In Q4, the economy moved solidly into expansion Posted Mar. 31, 2012 on Ed Dolan’s Econ Blog
  4. Sources of US GDP Growth in Q3 2011 Table shows the contribution Consumption contributed strongly to Q4 of each sector to the 3% total growth, led by strong motor vehicle sales GDP growth in Q4, 2011 Investment accounted for most of the gain in Q4 growth, as private inventory investment rebounded from negative growth in Q3 Federal government spending fell sharply, led by defense cuts; state and local government spending also fell Export growth was revised down slightly from the second estimate. Net exports were a drag on growth in Q4 Posted Mar. 31, 2012 on Ed Dolan’s Econ Blog
  5. Nominal GDP A Little Above Trend, Gap Remains Large The estimate of nominal GDP (NGDP) growth was revised downward slightly to 3.8% (quarterly growth stated as annual rate) NGDP growth consisted of 3.0% real growth and 0.8% inflation An increasing number of economists focus on NGDP growth as a key policy target. Real potential GDP growth has averaged about 2.3 percent over the past 10 years. Adding 2 percent for the Fed’s target rate of inflation gives 4.3 percent. NGDP targeters could thus make a case for a more stimulative policy Posted Mar. 31, 2012 on Ed Dolan’s Econ Blog
  6. GDI Grows at 4.4%, Outpacing GDP An unusual feature of the Q4 2012 data was the strong growth of Gross Domestic Income GDP is the sum of expenditures consumption, investment, government purchases, and net exports GDI comes from a different data set on household income, corporate profits, proprietors income, net interest, and other elements In theory, the two are equal, and usually they move more closely together than in recent quarters Posted Mar. 31, 2012 on Ed Dolan’s Econ Blog