Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.7 percent in the third quarter of 2012 (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.
The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent.
The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, federal government spending, residential fixed investment, and exports that were partly offset by negative contributions from nonresidential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased slightly.
I suppose the left will attempt to use this supposedly wonderful information to say that “the rich” can afford a tax increase without the economy getting hurt too badly. They’re wrong, of course, but that has never stopped them before.
Meanwhile, some historical perspective is seen on the right.
13 quarters after the end of the Reagan recession, the economy still had far more momentum than the current Obama economy, and there’s plenty of reason to believe that the Obama economy is running out of steam.
UPDATE: Zero Hedge’s reax, sparing me the effort of writing up a similar assessment (bolds and additional paragraph breaks are mine) –
One glance at today’s second read of Q3 GDP may leave some with the false impression that the US economy is soaring, because after sliding to 1.3% in Q2, and after a preliminary read of 2.0% in the first Q3 estimate, today’s print, which missed estimates of a 2.8% print, did nonetheless rise to 2.7%.
“A stunning success”, the administration sycophants would say. Absolutely wrong. Because a quick glance at the underlying numbers shows the true picture of the economy which contracted far more than most expected, with personal consumption collapsing to 1.4% Q/Q, on hopes of a 1.9% rise, and down from 2.0%. In fact, at 0.99% personal consumption expenditures – the core driver of 70% of the US economy – were a tiny 36% of the headline number.
Ironically today’s second GDP revision was far worse when analyzed at the component level, than the first Q3 estimate, which while lower overall at 2.0%, at least had personal consumption nearly 50% higher at 1.42%, or well over half of the total contribution.
So what drove “growth” in Q3? Nothing short of the most hollow and worst components of GDP: Government Spending, which soared to 0.67% of the annualized number, the first positive print in years, and of course, Inventories, which were responsible for 30% of the headline number. Finally, and most importantly, Fixed Investment, aka CapEx, was a meager 0.1%, or the lowest GDP contribution since Q1 2011. Without CapEx there is no corporate revenue growth (and future hiring intentions) period.
… all those hoping that the US consumer is finally waking up from his slumber and is spending (on credit of course) like a drunken sailor (for anything more than iPads using student loan proceeds), will have to wait until Q1 2013, as the Q4 2012 number will be even uglier than the one just released.
UPDATE 2: One clarification to ZH — its “first positive print in years” for all government spending is the first in nine quarters (2Q10, when Q/Q government spending grew by an annualized 2.8%). Federal spending growth in that quarter was an annualized 9.7%. The latest quarter’s federal component is an annualized 9.5%.