Inventories, Exports And Government Spending Boost GDP

October 28, 2016 - BEA Estimates 3rd Quarter 2016 GDP Growth to be 2.91% 
 

In their first ("preliminary") estimate of the US GDP for the third quarter of 2016, the Bureau of Economic Analysis (BEA) reported that the growth rate was +2.91%, up +1.49% from the prior quarter.   Most of the reported improvement in the headline number came from a +1.77% quarter-to-quarter gain in inventories, a +0.96% rise in exports, and a +0.39% uptick in governmental spending.

 

Offsetting the improvements was an aggregate -1.41% reduction in the headline number from softening consumer spending on both goods and services. Fixed investments remained in contraction at a -0.09% annualized rate.

The BEA's treatment of inventories can introduce noise and seriously distort the headline number over short terms -- which the BEA admits by also publishing a secondary headline that excludes the impact of inventories. The BEA's "bottom line" (their "Real Final Sales of Domestic Product") was a +2.30% growth rate, down -0.28% from 2Q-2016. If we take the BEA's "bottom line" at face value, economic growth actually softened during the third quarter. 

1 2 3 4
View single page >> |

Disclosure: None

...more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free iPad Pro.

FROM AROUND THE WEB