It’s no secret that spending cuts (and tax hikes) have retarded America’s growth for the past four years. But data from the Bureau of Economic Analysis suggests that the era of austerity may finally have ended.
The following chart shows the contribution of government and private spending to annual GDP growth, since the start of 2005:
A healthy Q2 print is no surprise: underlying growth was already known to be much better than the abysmal, weather-traumatised first quarter numbers indicated, while labour market indicators had been portraying an accelerated recovery for months now.
But 4 per cent annualised growth, along with a slight positive revision to the first quarter number from -2.9 to -2.1 per cent, was even better than expected. Read more
Among the factoids we came across while reading Books as Capital Assets, by Rachel Soloveichik of the BEA:
1) Book sales have tracked nominal GDP pretty closely for about sixty years: Read more
The BEA’s comprehensive benchmark revisions to the national income and product accounts will be released later today, and they’ll include the major conceptual changes announced earlier this year.
If you want a straightforward summary of the changes and how they matter, we recommend Robin Harding’s piece from Monday. (And remember that the annual benchmark revisions, also to be released today, will affect numbers going back to 2010. Look for GDP and GDI, which had diverged markedly in the year through the end of Q1, to be revised towards each other.) Read more
Wednesday’s downward revision to first quarter US gross domestic product was accompanied by an unchanged gross domestic income reading for both the fourth quarter of last year and the first quarter.
The two measures are now showing a fairly big divergence for that half-year. GDI climbed by 5.5 per cent in the fourth quarter of last year and 2.5 per cent in the first quarter, while GDP was higher by 0.4 per cent and a newly revised 1.8 per cent in those two quarters respectively. (All numbers annualised.) Read more
Credit Suisse economists have updated their “Missing GDP” chart (prior edition here), now showing the average contribution to real GDP growth of each subcomponent in the first thirteen quarters of the last six US recoveries, and then comparing them against the corresponding contributions in this one.
First quarter GDP in the US rose 2.2 per cent, coming in slightly under estimates for a 2.5 per cent increase and well below the 3 per cent recorded in the last quarter of 2011.
From Reuters: Read more
If you’re keen for yet another post comparing the US recovery against prior editions, we think this table sent by Credit Suisse on Friday is worth a quick look:
Accelerating recovery or a winter head fake? Who knows, but the advance estimate for Q4 real GDP growth was 2.8 per cent after third quarter growth of 1.7 per cent. Consensus expectations were for 3 per cent growth:
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 fourth quarter of 2011 (that is, from the third quarter to the fourth quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 1.8 percent.
The US returned to solid economic growth in the third quarter of 2011, but economists refused to sound the all-clear amid signs that the recovery is precarious, the FT reports. The annualised 2.5 per cent increase in gross domestic product, led by encouraging growth in investment and consumption, met market expectations and calmed fears that the world’s largest economy was falling into recession. It was the fastest rate of growth since the third quarter of last year. But consumers only managed to increase their spending through an unsustainable cut in their savings rate from 5.1 to 4.1 per cent. A fall in business inventories knocked 1.1 percentage points off growth.
As if Friday wasn’t going to be messy enough, advance second quarter US GDP results have disappointed on the downside.
The US economy grew at an annualised rate of 1.3 per cent in the last quarter, less than consensus expectations of 1.8 per cent. Even more startling were the revisions to previous estimates. Annualised Q1 GDP growth was amended to 0.4 per cent from 1.9 per cent — a whopping 1.5 per cent. Read more
And, following my earlier post on global growth, here is one on US growth.
Vasileios Gkionakis, my colleague at Fulcrum, has been producing weekly estimates for US GDP growth for several years now, and they have given consistently good signals about the past and future course of the economy. Read more
Fresh out on Friday — details courtesy of Reuters. At 3.2 per cent, the headline is below median expectations but we’ll be digging a little deeper in a bit to get the full story. Looks at first glance like the sales and inventory numbers are very solid indeed.
Tune in during Macro Live at 10am EST / 3pm GMT for more, hopefully incisive, commentary. Read more
The biggest gains to consumer spending in four years likely boosted US economic growth in 2010’s last quarter, leading to a consensus forecast of 3.5 per cent in Friday’s GDP release, Reuters reports. Spending by consumers may have grown by up to 4 per cent, while spending on equipment by business is also expected to have maintained recent rises. Recent economic data actually suggests that 3.5 per cent may even be a lowball estimate, especially looking at ISM figures, Pragmatic Capitalist argues. FT Alphaville will hold a special Macro Live live chat session at 10:00am New York time / 15:00pm London time to discuss the GDP release and other indicators.
Something of a scrap has broken out between Nouriel Roubini and Clusterstock’s Joe Weisenthal on the back of Friday’s bang-on-expectation Q3 US GDP release.
Actually, it seems more of a defensive back-peddling strop on Roubini’s part. Read more
The US economy grew exactly as analysts predicted in the third quarter. Though likely not as much as the Federal Reserve wanted.
GDP expanded 2 per cent on an annualised basis, according to flashes via Reuters: Read more
Get ready for a blockbuster seven days in the market, says FT Alphaville — next week brings the US mid-term elections, the FOMC’s likely QE2 decision as well as policy meetings at the Bank of Japan, the Bank of England and the ECB. If anything, the elections may be the least market-moving of the week’s events, with all eyes on the Federal Reserve’s stimulus measures instead. A wave of poor industrial activity data from Asia are encouraging traders to trim bets on growth-focused assets before Friday’s main event of US Q3 GDP, says the FT. The economy is forecast to have grown 2 per cent on an annualised basis, ahead of 1.7 per cent growth in the second quarter but still far from enough to tackle high unemployment, reports Reuters.
A beat for Ben.
US second-quarter GDP growth was revised from 2.4 per cent to 1.6 per cent by the Bureau of Economic Analysis on Friday, above a consensus of 1.4 per cent revised growth. Read more
US GDP grew at an annualised rate of 2.4 per cent in the second quarter, according to Commerce Department data released on Friday. From the release:
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 2.4 percent in the second quarter of 2010, (that is, from the first quarter to the second quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 3.7 percent.
Europe’s new age of fiscal austerity threatens the United States’ economic recovery, according to the NYT. While few economists predict a return to recession, a slower period of growth is increasingly likely. St Louis Fed chief James Bullard sought to play down the risks emanating from Europe in a speech in London on Tuesday, the FT says.
Receding fears of a Greek default and continuing good news on corporate earnings put some pep into stocks on Friday, according to the FT’s rolling global markets overview. The FTSE All-World equity index rose 0.3 per cent, the euro was firmer, and commodities saw demand. The main focus for traders is likely to be the initial reading of US first-quarter gross domestic product, out later on Friday.
Expectations were running particularly high on this number — analysts were forecasting US growth to have picked by 4.6 per cent in the fourth quarter on an annualised basis, up from 2.2 per cent in the third.
Well the US Bureau of Economic Analysis has now confirmed the number was even better than that — coming in at 5.7 per cent in the quarter. Read more
Think back to the end of October when Jan Hatzius, Goldman Sachs economist and sometime clairvoyant, suddenly lowered his forecast for the third quarter US GDP from 3 per cent to 2.7 per cent.
The air was thick with conspiracy theories. After all, this was the same Goldman economist who proved to be remarkably prescient in predicting US nonfarm payrolls earlier that month, adjusting his forecast less than 24 hours day before the data were due. Read more