4th Quarter ‘Advance’ GDP Growth (3.5%) Beats Original Expectations, Then Beats Upwardly Revised Expectations
Funny how that keeps happening.
Geez, do I really need to comment on presumptively negative this report by the Associated Press on 4th quarter GDP is (BEA announcement here)?
I’m guessing that the unbylined report is from my AP “buddy” Martin “Crummy Economy” Crutsinger (previous discussions of his handiwork are here, here, and here), and that he had this negative adjective-laced report already drafted last night (Update — It’s by a new name to me, Jeannine Aversa):
The economy snapped out of a sluggish spell and grew at a faster-than-expected 3.5 percent pace in the final quarter of last year as consumers ratcheted up spending despite a painful housing slump.
The fresh snapshot of business activity, released by the Commerce Department Wednesday, underscored the resilience of the economy; it has managed to keep on moving despite the ill effects of the residential real-estate bust and an ailing automotive sector.
The economy’s performance in the October-to-December quarter, which followed two quarters of rather listless activity, exceeded analysts’ forecasts for a 3 percent growth rate.
The economy opened 2006 on a strong note, growing at a 5.6 percent pace, the fastest spurt in 2 1/2 years. But it lost steam during the spring and late summer. It grew at a 2.6 percent pace in the second quarter and then a weaker 2 percent pace in the third quarter. The fourth-quarter’s rebound ended the year on a positive note.
For all of 2006, the gross domestic product (GDP) increased by 3.4 percent. That was an improvement from a 3.2 percent showing in 2005 and the strongest showing in two years.
Just a few weeks ago, the “experts” were predicting GDP would come in at about 2.0%. Then they looked at the Christmas retail and the December ISM manufacturing and non-manufacturing reports and scrambled to up their estimates to 3.0% or so. Today’s announcement even beats the revisions, and I believe (crossing fingers) that February and March adjustments to GDP (technically known as “preliminary” and “final” — the first release is referred to as “advance”) will end up moving it closer to 4.0%.
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UPDATE: Here are the last 30 years of GDP growth for context (years better than 2006 are in bold), and which party, based on which president’s budget was in effect during most of the year involved, is “responsible” for that year’s result (you can see these results by going to this BEA link and selecting the appropriate date range and the “annual” option):
To be clear on the party ID, it has to do with whose budget was in effect during most of the year involved. So Ford’s last budget was in effect during most of Carter’s first year (1977; actually through Sept. 30 of that year), Carter’s last budget during Reagan’s first year (1981), Bush 41’s last budget during Clinton’s first year (1993), and Clinton’s last budget during Bush 43’s first year (2001).
To explain in words what the Better/Worse comparison means — 15 years of the 29 years leading up to 2006 had GDP growth greater than 2006’s preliminary 3.4%; Republican administration-passed budgets were in effect during 8 of those 15 years. 13 of the past 29 years had lower GDP growth; GOP admin-passed budgets were in place during 8 of those 13 years.
IF YOU ARE SAYING THAT THE NUMBERS ARE TELLING US THAT THE ECONOMY IS DDOING WELL.FIRST OFF I NEED TO ASK YOU IF YOU KNOW THE MEANING OF THE WORD ECONOMY . IT IS THE ACCUASITION AND DISTRIBUTION OF RESURCES .
SO I GUESS WAHT YOU MEAN TO SAY IS THAT THE RICH FARE GETTING RICHER . WELL THE WAY THEY HAVE JUGGLED NUMBERS IN THE PAST AND PLAYED WITH THE STOCK MARKET .ANYONE WOULD BE NUTS NOT TO QUESTION THOSE NUMBERS WHEN THEY BENIFIT THOSE CAPITALISTS RESPONCIBLE FOR THE COUP OF 2000 AND THE OVER THROW OF THE GOVERNMENT . I IMAGINE THEY ARE WORRIED THAT IF THEY CAN’T KEEP THE MONEY JUNKIES HAPPY THEY WILL LOSE SUPPORT AND END UP GETTING JUST WHAT THEY DESERVE .
THERE IS NOTHING ANYONE FROM THE CAPITALIST OWNED MEDIA THAT I WILL BELIEVE UNTIL I SEE SOME JUSTICE DONE BY AMERICA AND ITS LEADERS ABOUT THE DEATH OF OVER 300.000 ARABS AND 6000 DEAD AMERICANS ( NOT TO MENTION THE OVER 20,000 CRIPPLED BY GREED AND MEGALOMANIA .
Comment by ROGER ACKLEY — January 31, 2007 @ 4:31 pm
#1, thanks for giving me the opportunity to expose you as a hopelessly incorrigible moonbat.
Comment by TBlumer — January 31, 2007 @ 9:26 pm
Well, I have to say I really liked today’s advance number, and I agree that it will likely be revised upward.
On another point – while the Climbing Limo method seems to have overestimated Real GDP growth for 2006-4Q, the difference seems to be mainly in housing (substantially higher interest rates) and motor vehicle production (driven by the spike in oil prices), the two areas that are significantly changed from the overall momentum in the period between 2005-Q3 and 2006-Q1 from which the forecast is derived.
In other words, the U.S. economy is a lot more diverse than just these two sectors and on the whole, upward inertia rules!
Comment by Ironman — February 1, 2007 @ 1:04 am
Upward inertia rules — I like that.
Comment by TBlumer — February 1, 2007 @ 6:17 am
You’re assuming federal budgets have a significant effect on the economy in the year that they are in force. Also, political business cycles have variable lag periods, not to mention weak evidence of their effectiveness.
Comment by Joe C. — February 2, 2007 @ 10:03 am