3.6 Percent Is Better Than 2.5 Percent, I Guess

On several occasions when GDP growth has been based primarily on inventory accumulation, I’ve felt compelled to call attention to the difference between inventory growth and growth in the more fundamental categories of fixed investment, consumption or exports. Inventory increases, which count in the GDP numbers as a form of investment, can be good or bad depending on whether they were planned and anticipated and a product of an accelerating economy or whether they were the unanticipated result of sales falling short of expectations. In the latter case, this quarter’s positive is likely to be offset by next quarter’s, or the quarter after’s, negative.

I hate it that the same thing has happened once again to increase the initial estimate of the third quarter real GDP from an annual rate of increase of 1.8 percent to 3.6 percent. Absent the upward revision in inventories, real final sales (real GDP minus inventories) in third quarter increased at an annual rate of 1.9 percent, down from a 2.1 percent increase in the second quarter. The difference this time is that more talking heads are recognizing and acknowledging inventories as the source of the increase. Many, however, are saying that the increase is more likely than not to be anticipated and therefore not likely to be reversed. Let’s hope so.

Comments (3)

Trackback URL | Comments RSS Feed

  1. Usha says:

    For the best possible projection mobility can the C110 be accompanied by the projection screen Acer folding option. com is dedicated to providing our customers with the best service possible.

  2. Shayla says:

    This is a good strategy of leveraging the value of your respective opt in e-mail checklist while nnot
    inhibiting the privacy off the readers. Frankly, there aree very few that fall under this category, aand Paid Surveys Ect is probably the best of them.
    When people follow them to make purchases, you
    get your commissions on each sale you make.

    Have a look at my blog … make money selling nothing

  3. Broderick says:

    What’s up, yup this piece of writing is actually good and I
    have learned lot of things from it about blogging.
    thanks.

    my weblog organic beauty products