This morning’s initial first quarter real GDP increase at a 2.2 percent annual rate was stronger than the fourth quarter’s 3.0 percent after adjustment for volatile inventory fluctuations. An inventory buildup accounted for two-thirds of the fourth quarter increase. Real Final Sales—GDP minus inventories—grew only 1.1 percent in the first quarter versus 1.6 percent in [...]
Unlike Wagner’s music, the fourth quarter GDP numbers are not better than they sound. They are worse, in fact, and the third and final estimate, out last week, didn’t improve them any. The second and third estimates both had real GDP growing at an annual rate of 3 percent in the fourth quarter, the largest [...]
(Not All Details are Bad) The front page of today’s Wall Street Journal features a useful breakdown of the third quarter real GDP statistics. On the negative side, it shows that the strength in consumption spending benefited from various temporary government programs: primarily cash for clunkers and the first time home buyers’ credit. Those will [...]
Gross Domestic Product (GDP) and real GDP are generated by total U.S. spending on final goods and services. The U.S. national income accounts use the spending categories of Consumption (C) plus Investment (I) plus Government spending (G) plus Exports minus Imports (X-M). GDP = C + I +G + X – M. (These categories roughly correspond to [...]
Some Reminders from Econ 101: GDP is an estimate of the total value of all final goods and services produced during a year (or in a quarter expressed at an annual rate). It's the broadest most comprehensive estimate of the value of the total output (and income) produced in the economy. Estimate. Yes, it's an [...]
In my opinion, the average watcher of financial cable TV and reader of the financial press can be forgiven some confusion. Experts are found at opposite extremes of many issues. For example, *We need more spending, but budget deficits are bad. *Debt is bad, but we are adding debt at a record pace. *Consumers and [...]
The Good, the Bad, and the Ugly The Good: The Trade Deficit is shrinking. The Bad: Trade is shrinking. The Ugly: Protectionism is growing. The deficit in U.S. trade in goods and services shrank to $26 billion in February, from a revised $36.2 billion in January. This is good news. On the other hand, [...]
Real GDP declined at an annual rate of 3.8 percent in the 4th quarter. However, that includes additional inventory "investment" worth 1.32 percentage points. Excluding inventory changes, "real final sales" declined at an annual rate of 5.1 percent, the more meaningful number since the inventory building was likely involuntary and doesn't auger well for the [...]
In my last blog for the New York Times, I reviewed the effect of our trade balance on GDP. We've had a deficit (imports>exports) for several years, which is a net minus, or drag, on GDP. However, in recent quarters, in part because of the decline in the dollar until lately, the deficit has shrunk, [...]
(Notes for Remarks Made at a Joint Atlas/NCPA Breakfast on Friday, September 26, 2008) I'm still under the influence of our "Cowboy Chic" night last night. I can relate to the cowboy part, but I'm not so sure about the chic. Given our preoccupation with the ongoing financial crisis, it reminded my of the [...]