Third quarter growth now 2.8%, much lower than original estimate
Bonds like this. Let’s see how the stock market reacts to this. Pre-market data show no big moves.
From the BEA:
Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.8 percent in the third quarter of 2009, (that is, from the second quarter to the third quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 0.7 percent.
The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 3.5 percent (see "Revisions" on page 3).
The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment that were partly offset by a negative contribution from nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The upturn in real GDP in the third quarter primarily reflected upturns in PCE, in private inventory investment, in exports, and in residential fixed investment and a smaller decrease in nonresidential fixed investment that were partly offset by an upturn in imports, a downturn in state and local government spending, and a deceleration in federal government spending.
Goldman warned earlier this month that this downward revision was to be expected because of distress in smaller business enterprises.
According to Paul Krugman: the original growth rate, assuming it was maintained, would have brought full employment during Sarah Palin’s second term….with this growth rate it will never happen. ” We may be in a technical recovery, but we’re not recovering.”
I like that term ‘technical recovery.’ I want it to gain more traction as a way of thinking about things because what Krugman says is right.
Here’s what I wrote about it in July:
https://pro.creditwritedowns.com/2009/07/technical-recovery-wont-feel-like-a-recovery-to-most.html
I didn’t coin the phrase, but I do want to coin the concept that the economy is not in an actual recovery until it reaches the level of GDP it attained before the recession began. Until then, it is merely in a technical recovery.
Maybe this will help people psychologically if the terms fit the reality better.