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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 Bloghttp://dolanecon.blogspot.com/ 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 http://dolanecon.blogspot.com
  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 http://dolanecon.blogspot.com
  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 http://dolanecon.blogspot.com
  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 http://dolanecon.blogspot.com
  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 http://dolanecon.blogspot.com

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