Friday, October 29, 2010

Strongest Consumer Spending Growth Since 2006

The BEA reported today that real GDP grew at 2.0% in the third quarter, boosted by a 2.6% rise in inflation-adjusted consumer spending, the highest quarterly increase since the 4.1% growth in the fourth quarter of 2006, 15 quarters ago.  This healthy growth in consumer spending from July through September is consistent with:  a) the many states that have been reporting increases in tax revenues in the third quarter from sales, individual income and corporate income taxes, and b) the stronger-than-expected retail sales report for September (7.2% annual growth).   


At 10/29/2010 9:00 AM, Blogger Ironman said...

Look for the figure to be revised upward a bit in the months ahead. Today's real GDP figure of $13,260 billion (in chained 2005 U.S. dollars) is a bit below what we had projected would be the final estimate for 2010Q3 back on 5 October.

If today's number holds, look for real GDP growth in 2010Q4 to be below 2%.

At 10/29/2010 9:15 AM, Blogger morganovich said...

# "The change in real private inventories added 1.44 percentage points to the third-quarter change in real GDP after adding 0.82 percentage point to the second-quarter change. Private businesses increased inventories $115.5 billion in the third quarter, following increases of $68.8 billion in the second quarter and $44.1 billion in the first."

Without the boost in inventories, GDP would have been barely positive in Q3

At 10/31/2010 8:43 PM, Blogger VangelV said...

I am sorry but there is no way to spin more consumer spending by a bankrupt nation and a large inventory build by manufacturers that have a hard time moving product at a profit as good news. The US economy is in big trouble and is depending of the Fed's quantitative easing program for some life. The problem is that any benefit is likely to be short lived as the damage done to the currency and the bond market offsets the lifeline that the Fed is throwing to companies and consumers that deserve liquidation instead.


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