U.S. GDP Up 2.0% in the 3rd Quarter, Despite Housing Contraction

[babylonsister]

U.S. GDP Up 2.0% in the 3rd Quarter, Despite Housing Contraction

Oct 29 2010, 9:44 AM ET

Although the U.S. recovery felt like it may have been stalling for some of the third quarter, the economy's growth was actually stronger than it was in the second quarter. Gross domestic product (GDP) grew at a 2.0% pace during the three months ending in September 2010, according to the Bureau of Economic Analysis. That nearly matches economist estimates of 2.1% growth and beats the second quarter's 1.7% pace. Breaking down the numbers shows progress in many sectors of the economy. Today's report also provides Democrats the opportunity to exhale, as it could have been much worse.

Let's begin with the chart showing GDP growth since the second quarter of 2006:



You can see that GDP growth remains well below its rate from a few quarters ago, but it's actually higher than it was a year ago. It's important to bear in mind, however, that this is just a first estimate. Two revisions will follow, and last quarter's GDP was ultimately 0.7% lower than the advance estimate predicted.

Before diving into the numbers, it's actually pretty easy to summarize the U.S. economy's performance in the third quarter. Americans spent more money, particularly on things like services and leisure. Businesses also ramped up their inventories. The trade gap didn't hurt the economy as severely as in the second quarter. That's all the good news. On the other side, there was a drastic contraction in the housing market. Government spending also grew at a slightly slower pace, as did private sector investment.

This news should come as a huge relief to Democrats. Although it won't help them much at the polls, at least it won't hurt them. Growth was still rather modest at 2.0%, but if it had declined from the second quarter, then Republicans would have a priceless talking point to dwell on. Instead, the Democrats can continue to assert that their economic policies have resulted in steady growth, while the Republicans will keep arguing that those policies have failed to allow growth to be as brisk as it would otherwise be.

more...

http://www.theatlantic.com/business/archive/2010/10/us-gdp-up-20-in-the-3rd-quarter-despite-housing-contraction/65394/

[Valienteman]

1. Hurray!! n/t

[daa]

2. Actually it is mostly (2.3) inventory build becuase

people are not buying anything and exports are way down (5%) and will not be doubled in 5 years.